Overview of U.S. policy in Europe : hearing before the Committee on International Relations, House of Representatives, One Hundred Fourth Congress, first session, March 9, 1995

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OVERVIEW OF U.S. POLICY IN EUROPE

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Qvervieu of U.S. Policy in Europe*...

HEARING

BEFORE THE

COMMITTEE ON

INTERNATIONAL RELATIONS

HOUSE OP REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS

FIRST SESSION

MARCH 9, 1995

Printed for the use of the Committee on International Relations

mm

'"'"29

U.S. GOVERNMENT PRINTING OFFICE
90-001 CC WASHINGTON : 1995

For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-047075-7

OVERVIEW OF U.S. POLICY IN EUROPE

\ V Y 4. IN 8/16: EU 7/13

Qvervieu of U.S. Policy in Europe*...

HEARING

BEFORE THE

COMMITTEE ON

INTERNATIONAL RELATIONS

HOUSE OP REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS
FIRST SESSION

MARCH 9, 1995

Printed for the use of the Committee on International Relations

29

■■•"^nivfi

-v

U.S. GOVERNMENT PRINTING OFFICE
90-001 CC WASHINGTON : 1995

For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office. Washington. DC 20402
ISBN 0-16-047075-7

COMMITTEE ON INTERNATIONAL RELATIONS
BENJAMIN A. GILMAN, New York, Chairman

WILLIAM F. GOODLING, Pennsylvania

JAMES A. LEACH, Iowa

TOBY ROTH, Wisconsin

HENRY J. HYDE, Illinois

DOUG tfEREUTER, Nebraska

CHRISTOPHER H. SMITH, New Jersey

DAN BURTON, Indiana

JAN MEYERS, Kansas

ELTON GALLEGLY, California

ILEANA ROS-LEHTINEN, Florida

CASS BALLENGER, North Carolina

DANA ROHRABACHER, California

DONALD A. MANZULLO, Illinois

EDWARD R. ROYCE, California

PETER T. KING, New York

JAY KIM, California

SAM BROWNBACK, Kansas

DAVID FUNDERBURK, North Carolina

STEVEN J. CHABOT, Ohio

MARSHALL "MARK" SANFORD, South

Carolina
MATT SALMON, Arizona
AMO HOUGHTON, New York

LEE H. HAMILTON, Indiana

SAM GEJDENSON, Connecticut

TOM LANTOS, California

ROBERT G. TORRICELLI, New Jersey

HOWARD L. BERMAN, California

GARY L. ACKERMAN, New York

HARRY JOHNSTON, Florida

ELIOT L. ENGEL, New York

ENI F.H. FALEOMAVAEGA, American

Samoa
MATTHEW G. MARTINEZ, California
DONALD M. PAYNE, New Jersey
ROBERT E. ANDREWS, New Jersey
ROBERT MENENDEZ, New Jersey
SHERROD BROWN, Ohio
CYNTHIA A. MCKINNEY, Georgia
ALCEE L. HASTINGS, Florida
ALBERT RUSSELL WYNN, Maryland
MICHAEL R. McNULTY, New York
JAMES P. MORAN, Virginia
VICTOR O. FRAZER, Virgin Islands (Ind.)

Richard J. Garon, Chief of Staff

Michael H. Van Dusen, Minority Chief of Staff

JOHN M. HERZBERG, Professional Staff Member

TRACY E. HART, Staff Associate

(ID

CONTENTS

WITNESS

Page

The Honorable Richard C. Holbrooke, Assistant Secretary of State for Euro-
pean and Canadian Affairs, Department of State 2

APPENDIX

Richard C. Holbrooke, prepared statement 33

Response to question submitted by members 47

(III)

OVERVIEW OF U.S. POLICY IN EUROPE

THURSDAY, MARCH 9, 1995

House of Representatives,
Committee on International Relations,

Washington, DC.

The committee met, pursuant to call, at 10:05 a.m., in room
2200, Rayburn House Office Building, Hon. Benjamin A. Gilman
(chairman of the committee) presiding.

The Chairman. The committee will come to order.

Before we begin our hearing today, Ambassador Holbrooke, I
would like to address just another topic that is of some concern to
us all.

This is the first full committee hearing since the shocking assault
that claimed the lives of the members of the staff of our consulate
general in Karachi and wounded a third. I would like to extend
through you to your colleagues in the Foreign Service our condo-
lences.

They go overseas in service to our Nation and we in the Congress
share with the executive branch responsibility for assuring that
they are as secure as possible in performing services abroad.

It is incumbent upon all of us in the Congress — and especially
the members of this committee — to do whatever is necessary to-
ward that end in providing security; toward the end of eradicating
the scourge of international terrorism, whether directed at Ameri-
cans or at anyone else, anywhere on the Earth.

So I invite our colleagues to observe a moment of silence in trib-
ute to our fellow Americans who have been struck down in Kara-
chi.

[Pause.]

Today's hearing is the first opportunity of our committee to focus
on our policy in Europe. Our witness, Ambassador Richard
Holbrooke, has served the Clinton administration with great dis-
tinction, first as our Ambassador to Germany, and now as Assist-
ant Secretary for European and Canadian Affairs at the Depart-
ment of State. In that capacity, we look forward to Ambassador
Holbrooke's presentation of an overview of the region for which he
is responsible — a region that stretches from our northern neighbor
to the Baltic countries.

Major challenges confront our policymakers in Europe, especially
in the Balkans, where wider and more violent conflict than we
have seen since the period, immediately following the disintegra-
tion of Yugoslavia, threatens once again to break out.

(1)

Ambassador Holbrooke has just returned from talks with Cro-
atian officials on the question of withdrawing the U.N. peacekeep-
ing force from Croatia.

Other issues on Ambassador Holbrooke's agenda include NATO
expansion into Eastern Europe, political developments in Central
and Eastern Europe — in particular the status of political and eco-
nomic reforms in the former Communist bloc — and the need to
shore up our ties with close traditional allies such as France.

I would note for our members that while Northern Ireland is cer-
tainly within Ambassador Holbrooke's jurisdiction, we are planning
a hearing next week on this subject. We have invited the Ambas-
sador to return to address Northern Ireland at that time, and I
hope he can respond affirmatively to our invitation.

The committee is also working to arrange a hearing on our policy
toward the states of the former Soviet Union at which Mr. Jim Col-
lins, our State Department Senior Coordinator for the New Inde-
pendent States would be our principal witness.

Before calling upon the Ambassador, I would call on our col-
league, the ranking Democrat, Mr. Hamilton, if he has an opening
statement.

Mr. Hamilton. Thank you very much, Mr. Chairman. Ambas-
sador Holbrooke, we are delighted to have you here. We look for-
ward to your testimony.

The Chairman. Do any of our colleagues wish to make any state-
ment? If not, we will proceed with your testimony, Mr. Holbrooke.

STATEMENT OF THE HONORABLE RICHARD C. HOLBROOKE,
ASSISTANT SECRETARY OF STATE FOR EUROPEAN AND CA-
NADIAN AFFAIRS, DEPARTMENT OF STATE

Mr. Holbrooke. Thank you, Mr. Chairman. It is a great pleas-
ure to appear before this committee again, where I have spent so
many hours, and to appear before you as Chairman for the first
time, and appear before Congressman Hamilton, who I have testi-
fied before when he was Chairman so often, with such great pleas-
ure.

I have a statement for the record I would like to submit if that
is all right with you, and make it

The Chairman. Without objection.

Mr. Holbrooke. And make a few brief comments.

At the end of the cold war many people thought that America's
political and strategic presence in Europe could be radically down
scaled. We have been able to reduce our troops in Europe because
the Soviet threat no longer exists, but events in the last 5 years
have made it clear that our continued presence in Europe is essen-
tial for a stable balance of power in Europe.

We are in fact, whether we like it or not, a European power. His-
tory shows in this century that when we disengage from Europe,
Europe's instability which follows draws us back in, and therefore
this administration is committed, as evidenced most symbolically
by President Clinton's four trips to Europe last year, to an active
engaged foreign policy throughout Europe; build on a strong sup-
port from NATO, which we will continue to lead; strong encourage-
ment for the expansion of the European Union; and active diplo-
macy in regard to Russia and the former Soviet Union; a very ac-

tive effort in the countries of Central Europe emerging from com-
munism, but still with uncertain democratic traditions; and a spe-
cial emphasis on the crisis in Bosnia and Croatia and the Balkans.

A proper European security structure will require integration of
all three parts of Europe; what we used to call Western Europe, the
NATO countries; what we used to call Eastern Europe, but which
the State Department has renamed Central Europe; and I was very
glad to see that for the first time this morning the New York Times
editorial board in its second editorial referred to the region as
Central Europe. I think it is important we call the region, Poland,
Czech Republic, Hungary, Slovakia, Romania, and so on, Central
Europe, which is how they regard themselves. It is more than just
a word. We have changed it and I hope that your committee will.
I suggested last week to the Senate that the SEED Program ought
to be renamed the SCED Program to reflect the change, and I was
not being entirely factitious.

But in any case, Central Europe is an important part of Europe
where instability has been incipient, where the two worst wars in
the history of humanity and the cold war all played themselves out
in the lifetimes of our parents and grandparents. And, finally, Rus-
sia and the former Soviet Republics.

In order to integrate these three parts of Europe, American lead-
ership is required to be continuous, active and engaged. The long-
term goals should be clear. The Europe of the institutions should
expand to meet the Europe of the map. That will take time. The
process has already begun. Partnership for Peace and OECD have
already reached out to these countries. NATO and the European
Union lie ahead. We are actively engaged in leading our NATO al-
lies toward a slow, gradual, careful, Dut inexorable expansion east-
ward. It is one of the most important aspects of our policy.

And you mentioned, Mr. Chairman, that I have just come back
yesterday from Zagreb, which is correct. But the previous week,
and I would also like to note this, I had returned from an equally
important trip to Turkey, Romania, Slovakia and Hungary. And in
Hungary I met as well with all the American Ambassadors to the
Central European nations. So I hope we will be able to also discuss
our important policies in that region.

This process will take time and will require a bipartisan effort
with the Congress.

I will be happy to answer any specific questions you have on
these issues or any others that might be of interest to you.

Thank you, Mr. Chairman.

[The prepared statement of Mr. Holbrooke appears in the appen-
dix.]

The Chairman. Thank you, Mr. Holbrooke.

Ambassador Holbrooke, today's New York Times carries a story
about a highly classified CIA report on atrocities in the Bosnian
conflict. Now, the report is sourced to high U.S. officials who have
been privy to the report, and it says, quoting one official that while,
and I quote, "No conclusive evidence has been found of the direct
involvement of Bosnian, Serb or Serbian leaders in the planning
and execution of large-scale ethnic cleansing, the systematic nature
of the Serbian action strongly suggests that Pale, the Bosnian Serb

capital, and Belgrade exercised a careful veiled role in the purpose-
ful destruction and dispersal of non-Serb populations."

Have you read that report? If so, do you agree with its conclusion
that Serbian leader Milosevic is extremely ill-fitted for the role of
peacemaker? Please see to it that I, along with other congressional
leaders, are able to see that report.

Mr. Holbrooke. Mr. Chairman, I have seen the report. I was
briefed on it, I think, in November, or December. I do not remem-
ber the exact date. I found it so interesting that I stopped the brief-
ing shortly after it started, and called in all the senior people in
the office and all the staff people around because I wanted them
to see the visual.

For those people who have not been in the region firsthand, the
report can be quite shocking. Anyone who has traveled in the area
will find nothing surprising in it. The Serbs started this war. The
Serbs are the original cause of the war. The report points out that
atrocities have been committed on both sides, or all sides, but that
the burden of responsibility and guilt lies clearly with the Serbs.

And it did not affect my view of the situation, Mr. Chairman, be-
cause it contained nothing except additional corroborative evidence.

As for the congressional access to it, I cannot speak for the origi-
nating agency in a formal way. But I can assure you that if it has
not already been provided to your committee, I will recommend it
be done, and I would be happy to try to arrange it as soon as this
is over.

I understand that the report is in the possession of, and available
to you, through the House Select Intelligence Subcommittee.

The Chairman. I am sure it would be, and we appreciate your
efforts in doing that.

Mr. Holbrooke. We will follow up on that right after this hear-
ing.

As for your question about Mr. Milosevic, first of all, I do not
agree at all with the statement in the Times article, that the ad-
ministration may fear that wide dissemination of the report could
cause Mr. Milosevic to cease his cooperation, et cetera. I just do not
agree with that. These are facts. They must be dealt with as facts.

As for Mr. Milosevic, he has his own objectives. I see no indica-
tion that he has changed those objectives, but he has changed his
tactics. Last year he opted out of the war. That was an important
development notwithstanding the fact that the war originated with
actions that he started. And we do not cooperate with Mr.
Milosevic. We try to work with all the parties to end this terrible
war, and we will continue to do so.

The Chairman. Mr. Secretary, President Clinton has committed
our Nation to providing some $10 million in fiscal year 1995 secu-
rity assistance to support the creation and training of the Joint
Baltic Peacekeeping Battalion. Most of the $10 million is yet to be
obligated. As I understand, there seems to be no funds yet avail-
able to provide the balance of the $10 million. In fact, there has
been talk of taking that fund from the economic assistance account
for Eastern Europe to pay for the balance of that security assist-
ance commitment by the President; kind of like robbing Peter to
pay Paul. Some of us feel that would be a bad precedent for our
economic assistance program.

Can you tell us what the status is of that matter and where will
the balance of the $10 million be funded?

Mr. Holbrooke. The President of the United States made a pub-
lic commitment on this in Riga in the summer of last year. That
commitment will be met.

The problem arose, quite frankly, after Haiti, when the budg-
etary pressures, some of them coming from Congress, required an
immediate shifting of funds to cover a short-term need, and a
shortfall developed in the Baltic Peacekeeping Battalion. It is very
small. I think it is now down to $1.3 million out of the original $10
million.

I cannot give you the fiscal details, Mr. Chairman, but I can ab-
solutely categorically assure you that the President's commitment
will be met. The problem has been that since the Congress has in-
sisted that each additional activity be funded out of existing funds,
there has been a lot of shifting of funds, and this has created more
bureaucratic confusion over relatively small amounts of money
than I have ever experienced in my government career. But it will
not affect this commitment. I assure you of that.

The Chairman. Thank you, Mr. Secretary. Mr. Hamilton.

Mr. Hamilton. Thank you very much, Mr. Chairman.

Mr. Secretary, we have some deadlines approaching that worry
me a great deal. One is the March 31 expiration of the
UNPROFOR mandate in Croatia, and the possible withdrawal of
the UNPROFOR troops as insisted upon by President Tudjman.

The second date is the May 1 deadline for the renewal of the ces-
sation of hostilities agreement in Bosnia.

If I understand the President's commitment, our President's com-
mitment, it is that we are prepared to put U.S. ground forces into
Bosnia, to help UNPROFOR withdraw, if that event comes about.
And I fully understand your position that you want UNPROFOR
to stay, and we all do, I think, but it may not.

Witn respect to Croatia, it is not clear to me that the President
has made a commitment for U.S. forces to assist in bringing
UNPROFOR out of Croatia; at least he has not made a public
statement with regard to that.

My principal concern here, I guess, is what might happen if we
have to commit forces to withdraw UNPROFOR. And my worry, of
course, is that we would be drawn in to protect the civilian popu-
lation, to provide humanitarian assistance, or to respond to mili-
tary provocation that might arise.

The question, then, is do I have your assurance that if it is nec-
essary for the United States to put combat forces into Bosnia, or
into Croatia, to help UNPROFOR withdraw, that they will be there
only for the purpose of the UNPROFOR pullout, and that they will
not remain there for any other purpose?

Mr. Holbrooke. Yes.

Mr. Hamilton. That is a very important assurance.

Now, secondly, the President has not made a public case for put-
ting troops into Bosnia or into Croatia. I think he may have com-
mented on it, but has not made a public case for it. I am sure you
recognize how difficult it would be under present circumstances to
get the Congress to go along with putting American forces in the
former Yugoslavia for any purpose.

I suppose the reason for the President not making the case up
to this point is that he wants to give every possible opportunity for
diplomacy to succeed. Is that correct?

Mr. Holbrooke. That is correct.

Mr. Hamilton. Have I state accurately our commitments as you
understand them at this point?

Mr. Holbrooke. Yes. I think you have exactly, Mr. Hamilton.

Mr. Hamilton. What can you tell us with respect to your recent
visit there? And I guess my real interest here is the broader ques-
tion. Are you optimistic that we can avoid UNPROFOR pullout?

Mr. Holbrooke. Well, Congressman Hamilton, first of all, I
would like to tell you as little as you would permit me to on this
because having just returned from Zagreb yesterday, and planning
to return to the region this weekend, we are in the midst of a very
delicate and critical discussion with the Government of Croatia.
Both sides agreed we would not discuss the details in public.

You have correctly stated our view and our goal. I would like to
say one thing on behalf of the Croatians, because our disagreement
with their goal — with their tactic — is so well understood, and that
is that they have a legitimate grievance. Legitimate grievances
that under the cover of the U.N. forces in the Krajina, the Serbs,
the Croatian-Serbs did ethnically cleanse the Krajina of Croatians,
causing hundreds of thousands of refugees.

The Vance Plan, in short, was never fully implemented. And I
conveyed to President Tudjman our view that the consequences of
U.N. withdrawal from the Krajina could be extraordinarily dan-
gerous, and could trigger the most dangerous situation Europe has
seen since 1945. And we are currently discussing ways to avoid
that outcome.

But I would like to express that the concern that has led them
to this action is legitimate. It is simply that the course that they
have chosen to follow to deal with it is far too dangerous for the
United States and our Western allies to sit idly by and watch un-
fold.

And with your permission, I would like to reserve the details for
another forum.

Mr. HAMILTON. My time is up. I just want to convey to you that
I think we are at a very critical point, approaching a very critical
point here.

Mr. Holbrooke. I think we are there, Mr. Hamilton.

Mr. Hamilton. It is our obligation, I believe, to be crystal clear
as to what the United States and what NATO will do and what we
will not do in these circumstances. And I hope that part of that
statement is that we will not enter the war on behalf of either
Bosnia or Croatia.

Mr. Holbrooke. I believe that that is well understood in Zagreb.
If there was any previous misunderstanding, I do not think there
could be any after our discussions.

Mr. Hamilton. Is it well understood in Sarajevo?

Mr. Holbrooke. I think thev have understood that for some
time, but there is the additional point in Sarajevo which does not
apply in Croatia concerning the resolution to lift the arms embargo,
and that creates a different set of sequences. So we are talking —
first of all, I completely agree with your comment that we are at

a decisive and critical moment because of the twin deadlines we
are approaching.

But in regard to Bosnia, because there is a resolution in both
chambers to lift the arms embargo, and because that would trigger
a U.N. withdrawal from Bosnia, leaving Croatia aside, and would
then create enormous pressures for other actions, I think that the
message as you conveyed it may not be perceived the same way in
Sarajevo as it is on Zagreb.

What I am saying here is that in regard to Croatia, I believe the
executive branch, working with our friends in Zagreb and the gov-
ernment, can deal with the problem for the time being with your
important public statement. But in Sarajevo, the actions of Con-
gress over the next few weeks will also be a critical variable.

I hope that is a response to your question.

Mr. Hamilton. Well, to the extent that there is doubt in Sara-
jevo about whether we are prepared to put U.S. forces into Bosnia,
that creates, I think, an even more dangerous situation.

Mr. Holbrooke. Well, I understand that, Congressman Hamil-
ton. And what I am suggesting is not that they think we are going
to put forces in, but that there is great lack of clarity among the
advocates of the unilateral lift resolution as to what those advo-
cates wish to have follow that event. Air strikes, military assist-
ance, equipment, training; no one is talking about ground troops.
Everyone has made clear there will not be American ground troops,
but there has been a question, and one that I hope that this com-
mittee will address, as to — particularly the people who support uni-
lateral lift — what exactly they are supporting beyond the action of
lift itself, because you cannot— to lift and then walk away would
be the most irresponsible act imaginable.

Mr. Hamilton. If the Congress of the United States passed a bill
calling for the unilateral lifting of the sanctions, the embargo,
would the President veto it?

Mr. Holbrooke. I am not able to answer that question, Con-
gressman.

Mr. Hamilton. My judgment is the President should make his
position clear on it.

Mr. Holbrooke. When I say I am not able to answer that, the
Vice President has already said publicly thatthe would veto it if
necessary. But the actual action of how he will respond, there are
several options here. But our opposition to it is clear because we
believe that it creates consequences that are of enormous danger.

Mr. Hamilton. Thank you, Mr. Chairman.

Mr. Bereuter. The chair will try to hold members to 5 minutes,
but I granted the distinguished ranking minority member some lib-
erty on this issue because I think the dialogue, the question here
was important to us all.

Mr. Holbrooke. Congressman, may I just make one additional
comment regarding an event next week which might be appropriate
to mention?

Mr. Bereuter. Yes.

Mr. Holbrooke. Next week we will be celebrating the first anni-
versary of the federation between the Croatians of Bosnia and the
Bosnian Muslims. Secretary Christopher will preside over this
event. We are going to — we are organizing it now. We hope to have

8

very high level participation from the region. We will be inviting
Members of Congress to participate as well.

I mention that because your support for the federation is a criti-
cally important component of preventing the Serbs from completing
their goals. And whether or not a person supports unilateral lift or
not, I nope that there will be unanimity of support in regard to the
federation. We will be discussing this in greater detail with you in
the next few days.

Mr. Bereuter. Thank you very much.

I think the assurance that you gave Chairman Hamilton was

Earticularly important, that U.S. troops would not be used for
roader purposes than extraction of troops in Croatia if that proves
necessary. I need to say to the administration and to the President
that there is no support for broader use of troops in the Congress
or in the American people. In fact, there is deep opposition to it.
The President needs to understand that.

I would also like to comment briefly upon our current flop with
France over industrial espionage. Having just come off of a 6-year
term on the House Select Committee on Intelligence, the chair is
aware, despite protests to the contrary, that France has conducted
an undeclared industrial espionage war against the businesses of
the United States. I am talking about commercial enterprises in
France and abroad and in this country.

The House Select Intelligence Committee has told the Central In-
telligence Agency and the intelligence community generally to de-
fend our economic interest, and that is what we are going to do.
And while we do not desire a confrontation with France, we do not
believe that this matter ought to be used for election politics in
France neither.

Second, I would like to say that I think the administration need-
ed to have taken a stronger role last year in the selection of the
Secretary General for NATO. A variety of things happened which
suggested that certain countries coula not provide the next Sec-
retary General, and we have had two very strong Secretary Gen-
erals, and that has been very important. The last two have been
very strong.

We are watching with some interest the current situation and
the current Secretary General's difficulties in his own country.

But I would say that when the members of the North Atlantic
Assembly made a recent visit there, that our views about some im-
portant matters on NATO/U.N. relationships left the members of
our delegation ambivalent, as you may have heard from reports
from State Department personnel involved.

There is a troubling view that has emerged among some of our
friends and allies in Europe, and we certainly saw nothing which
made us feel more at ease from listening to the Secretary General
and the Ambassadors to NATO from the various other countries,
to ease our concerns. That concern is there is an attitude that
NATO should be viewed subservient as a superactor or otherwise
to the United Nations. The U.S. congressional delegation to the
NAA on a bipartisan basis across the whole political spectrum here
reject that concept, and we are quite concerned about how relation-
ships between the United Nations and NATO have evolved in the
former Yugoslavia, and the way things are being handled there.

I notice with some interest that you on page 13 of your statement
said, "In no way can OSCE," we used to know that as CSEE, "be
made superior to NATO." It is the view of Members of Congress
that watch NATO that that same attitude needs to be reenforced
with all of our European allies and with the Secretary General.

If you have any comments about that, I would be pleased to hear
it.

Mr. Holbrooke. Congressman, allow me to express some great
bafflement here. I just do not know what you are talking about.
There is absolutely no action that this administration has ever
taken that would subordinate NATO to any other organization.

Mr. Bereuter. No, I

Mr. Holbrooke. On the contrary, on the contrary.

Mr. BEREUTER. Mr. Secretary, you misunderstand. I am saying
that this is a concern that is growing in Europe, and we want you
to know we think that is a dangerous kind of

Mr. Holbrooke. I have must spent a year, again, Congressman,
I have just spent a year living in Germany. I never heard that
charge. I want to reserve comment on one issue for a minute, and
that is the dual key arrangement in Bosnia, which is one of the
worst arrangements I have ever seen in my life.

But on the question of NATO, we lead NATO. In the last few
months this administration, with support from the Congress, bipar-
tisan support, has been leading a process of expanding NATO, as
I said in my opening statement, eastward gradually and carefully,
to bring in the countries of Central Europe.

Without us there will be no NATO. There are countries in Eu-
rope that would like to subordinate NATO, not to the U.N., but to
the EU, or to the European defense pillar, or to the WEU. We all
know which countries those are. It will not happen. It is unaccept-
able. NATO is the most important peacetime military alliance in
the history of the world, and this administration has done every-
thing it can to strengthen it.

You correctly quoted my comment about OSCE. It applies equal-
ly to the U.N. or any other organization.

Now, there is one very unfortunate fact which we inherited, and
that is this famous or infamous dual key arrangement. It is ter-
rible. It takes two important organizations, the U.N. and NATO,
with totally different mandates and functions, and gives them a
mutual interdependence which weakens them both. I hope we
never see it again. It was a disaster.

Seven times last year they were what many of you would regard
as pin prick NATO air strikes under constraints imposed by the
U.N.

I can tell you that until the cease-fire took place, I spent a great
deal of time trying to stimulate stronger NATO action every time
NATO came up against the constraints imposed under the dual
key. And this was doubly ironic because very often you had coun-
tries of the same — you had officers of the same nationality and
both halves of the dual key taking contradictory positions.

I hope that among the many lessons we have learned from this
tragic situation in Bosnia that will be one of them. These two orga-
nizations each have an important role. We should not mix them up.

10

Mr. Bereuter. I do appreciate my colleagues' indulgence. I do
need to respond to the Secretary very briefly so that there is no
confusion about this issue.

The criticism that you have leveled against the dual key arrange-
ment of course are broadly shared here, and we appreciate you
speaking out on that. But you should know that, for example, in
the 1993 Copenhagen meeting of the North Atlantic Assembly this
issue about making NATO subservient to the United Nations was
voted on, and American's delegation lost in that issue on a very
close vote.

If you will take a look at the notes that someone undoubtedly
took before the State Department and for our Ambassador, Robert
Hunter, who, by the way, is doing an outstanding job for us there,
you will find that when the question was raised with the Secretary
General, that in fact, we received no assurances. In fact, we were
chastised for suggesting that the United Nations did not have a su-
perior role to NATO, joined in by Ambassadors from several of our
allied countries. The Ambassadors reiterated the view that, in fact,
the NATO was subservient.

So that is a fact that there is an attitude that is increasingly
growing within some of our NATO ally countries, and I think you
need to be as forthright with them as a department as you are here
today.

Mr. Holbrooke. I appreciate that, Congressman. I will be hav-
ing lunch as soon as this hearing is over with the NATO Secretary
General, and with Ambassador Hunter, both of whom are in town.
While I was in Zagreb, they met with the President. I will bring
your comments to their attention, and I will bring their responses
directly to your attention as soon as the lunch is over because I am
concerned here.

But let me be clear. From an American point of view, no admin-
istration could ever fulfill its responsibilities to the nation's secu-
rity by allowing NATO to be subservient to any other organization.
It is our most solemn treaty commitment in Europe.

Mr. Bereuter. Thank you very much. That is an important reas-
surance, and I had expected it.

Mr. Holbrooke. Thank you for bringing it up.

Mr. Bereuter. I call upon the gentleman from California.

Mr. Lantos. Thank you very much, Mr. Chairman.

Mr. Ambassador, delighted to have you here. No person has occu-
pied your present position was better prepared and more knowl-
edgeable about the area. So allow me to deal with some very seri-
ous underlying issues that in my judgment cripple our policy.

The phrase "The moral authority of the West" has become an
oxymoron, and all of the issues that you are dealing with are being
dealt with, it seems to me, at a very superficial and peripheral
level. Let me be specific.

For the last few years Milosevic has gotten away with murder,
and every week, every month, we open tne paper and find yet an-
other concession by the West, whatever it is called, the contact
group, various other entities, which Milosevic reads and finds unac-
ceptable.

Well, let me advise you, Mr. Ambassador, that Tudjman's ulti-
matum stems directly from learning the Milosevic lesson. The no-

11

tion that Tudjman can establish an ultimatum in the face of please
by the West to cease and desist indicates the lack of credibility that
the West has throughout the region.

During the Bush administration, I advised the State Department
and pleaded with the State Department to get Milosevic here and
to advise him that there is such a thing as NATO, which has func-
tioned magnificently as a deterrent force vis-a-vis the mighty So-
viet Union, and could do so vis-a-vis Serbia.

I am advising this administration now to get Tudjman to Wash-
ington. Call him here. Have Tudjman meet with the administration
and the leadership of the Congress, the bipartisan leadership of the
Congress, so we can tell him in plain English that ultimata from
Zagreb will not be allowed to plunge this whole region into the
third Balkan war. Tudjman is playing with us as a cat plays with
mice, and the reason is we have no credibility and we have no
moral authority.

Yesterday in Geneva the deciding vote against censoring China's
human rignts policy came from Mr. Yeltsin's government. We lost
by a vote of 21 to 20. One vote against censoring China's human
rights policy came from Yeltsin.

We here are told do not expand NATO because Yeltsin will be
upset. The Russians will be upset. We are so hypersensitive to
their concerns that we cannot blow our nose. Despite the most
stringent lobbying by this administration, the Russians told us in
Geneva yesterday "Go to hell. We think Chinese human rights poli-
cies are excellent. They are superb. We love it."

You know who another vote was denying a censor to China's
human rights policies? I will tell you. Mexico. Mexico. In the wake
of a $50 billion bailout it turns your stomach that the U.S. Ambas-
sador cannot tell the Mexican representative in Geneva just vote
the truth. Do not yield to our pressure. You know what China's
human rights policies are. No, the Mexican Ambassador in Geneva
yesterday joins the Russian Ambassador in Geneva yesterday say-
ing human rights in China are great.

Tudjman is giving you an ultimatum, because he knows we are
going to back down. He knows everybody is going to back down.
Everybody has been backing down since Milosevic unleashed vio-
lence in the former Yugoslavia.

We can manicure the lawn, but what is called for is the restora-
tion of the moral authority and the credibility of the West which
is light years away. The Italian Government no — I mean the new
Italian Government rose from the ashes of penetrating corruption
that destroyed the former political system. The French moral au-
thority consists of panting to sell everything again to Iran and
Iraq, as they did before the Persian Gulf war.

Across Europe, and because of our own timidity in terms of our
foreign policy, we have no credibility. And until we have credibility,
the Milosevices and the Tudjmans of this world and the Yeltsins
of this world and the Mexicans of this world will thumb their noses
at us because they know we do not have the fortitude to act.

Mr. Holbrooke. Congressman Lantos, I thank you for your com-
ments. I would like to make about three brief responses.

First of all, in regard to Croatia, as I said at the outset, we are
engaged in a very intense dialogue with the government in Zagreb,

12

and I would prefer to reserve specific judgment, but to assure you
that we will not back down. The Croatian Ambassador is in the au-
dience today. I am very pleased he is here. I think it is extremely
useful because it means that the words of you and your colleagues
will be heard directly in Zagreb before the day is out. And as we
always tell all governments in Europe, the voice of the Congress
should be listened to as carefully as that of the executive branch.

On the generic issue of America's moral authority, with all due
respect to one of the Members of Congress for whom I have the
greatest respect, I do not believe we have lost our moral authority.
I think that moral authority in general has eroded somewhat in the
world with the end of a simple or more clear cut world that was
symbolized by the Berlin Wall.

I think the decline in the amount of resources that the United
States is devoting to backing up its moral principles has weakened
our ability to carry out some of our goals. But I do not see that.
I have just come back from Bucharest, and Bratislava, and Buda-
pest, and Zagreb, then Ankara, and Istanbul, and throughout that
region there was a great — and this is the most critical area of Eu-
rope, Southeastern Europe where instability is incipient and where,
I would submit to you, you have the most problems in the globe
today. I think Southeastern Europe has replaced Northeast Asia as
the really most explosive part of the world. And in that area there
is a widespread longing and yearning for American leadership
which we are providing.

In Turkey, where I have had expensive talks recently that com-
bines strategic, political and human rights issues, and where Amer-
ican active diplomacy was quite important in the European Union's
decision 2 days ago to create a customs union.

In Hungary, in Slovakia, in Romania, where we are actively en-
gaged in insisting that all three countries understand that they
must resolve what is sometimes referred to in an oversimplified
manner as the Hungarian problem; the problem of the Hungarian
minorities. The treaties now being negotiated between Hungary
and its two neighbors are being negotiated with heavy American
support from our Ambassadors. But we are active throughout the
region, and I do not believe that moral authority of our great na-
tion has disappeared.

Mr. Bereuter. The gentleman from Illinois.

Mr. Lantos. Mr. Chairman, may I just ask the Ambassador to
respond to my comment concerning both the Chinese — both the
Russian and the Mexican vote on the China human rights?

Mr. Bereuter. If you could do it very briefly, if you care to.

Mr. Holbrooke. Oh, Congressman Lantos, I really deeply regret
these votes. As you know, I no longer work on Asian issues, and
I have been so — let me be very frank with you. I have been so pre-
occupied with heading off this extraordinarily dangerous situation
in Rrajina and Bosnia that I have not been personally deeply in-
volved in this issue.

Neither Mexico nor Russia's vote in Geneva were things I worked
on personally. But I deeply regret those votes. I really do.

Mr. Lantos. Do you not think they are an index that we do not
have the weight to persuade Mexico and Russia to say that China's
human rights situation is atrocious?

13

Mr. Holbrooke. Well, apparently — apparently, as clearly what
is indicated by the votes. What I do not know, Congressman Lan-
tos

Mr. Lantos. That is my point, Mr. Ambassador.

Mr. Holbrooke. I understand that, and I accept it. What I do
not know, because I was not involved in it, is exactly what hap-
pened to lead to those votes. And if you wish, we can bring more
information to your attention.

Mr. Bereuter. The gentleman from Illinois, Mr. Manzullo.

Mr. Manzullo. Thank" you, Mr. Chairman.

Secretary Holbrooke, I would like to commend you on your work
with the Turkish Government and McDonalds Corporation to facili-
tate McDonalds' investments plans in Turkey, which is to build 150
units there by the year 2000, and to promote capital investment
and export growth in that country.

As you know, in order for McDonalds' investments to go forward,
it is seeking a 7-year tariff rate suspension on its four priority raw
materials: beef, chicken, cheese and french fries.

As you head the U.S. delegation later this month at the U.S.-
Turkey Economic Commission meeting, what assurances can you
give us that this issue will be on the plenary session agenda of this
bilateral meeting on March 30?

Mr. Holbrooke. We will — we are making Turkey a major target
for American business. The Commerce Department has selected
Turkey as a big emerging market; 1 of 10 in the world. Our new
Ambassador, Mark Grossman, has been tasked by the Secretary of
State and the Secretary of Commerce with promoting these activi-
ties very, very vigorously.

I will chair, cochair, as you just mentioned, the Joint Economic
Commission at the end of March. And I assure you I will raise this
issue on behalf of McDonalds.

Mr. Manzullo. Thank you very much.

Mr. LEACH. Mr. Chairman.

Mr. Holbrooke. By the way, it is an extraordinarily popular
product in that part of the world.

Mr. Bereuter. The chair will call upon Mr. Leach.

Mr. Leach. Well, I would like to just turn for a second from the
microaspects of business to the macro.

Mr. Bereuter. We cannot hear you.

Mr. Leach. I said I would just like to turn for a minute from the
microaspects of business to the macro. Let me say that, partly com-
ing from another committee of jurisdiction, but looking directly at
the State Department, it appears to me that we are still dealing
with a European setting with the politics of spinoffs of events of
this century that are new and unique, and we are all coming to
grips with them.

But in a very almost crushed time period we are seeing new eco-
nomic kinds of circumstance come to the fore that are going to need
some very prompt attention from the Department of State. By that
I mean, the Mexican situation, and the possibility that in Europe
there are larger Mexicos. One of the problems is how does the Eu-
ropean Community and then the world community come to grip
with the macroeconomic dilemma, and to recreate stability in the

90-001 0-95-2

14

wake of some kinds of anarchistic developments that can happen
in the world economy.

There are only two realistic kinds of approaches. One is to have
responses through the international financial institutions that have
the capacity to act in a stabilizing way such as the IMF, which
might or might not need a significant refurbishing. The other is to
move in the direction of seeking stability through orderly reduc-
tions in debt.

One of the extraordinary aspects of world affairs today is that
people have talked about and noted that in the political arena you
have a growing, but still largely absent international political code,
but you also have in the economic arena the absence of some codes;
most particularly in bankruptcy kinds of procedures.

And what I would like to ask you, Mr. Secretary, relates to some
of the tensions that could be developing, particularly in Europe, but
not just Europe.

Mr. Holbrooke. Sure.

Mr. Leach. What kind of priority are you giving to this issue?
And is the Department prepared to move forward to try to expand
international law, particularly in the bankruptcy arena? And by
bankruptcy, I mean for nation states, not for individual corpora-
tions.

Mr. Holbrooke. Well, Congressman Leach, with full knowledge
of your extraordinarily important role in the Mexican crisis, let me
respond that we — as Ambassador to Germany, I spent over half my
time on issues related to business and economic. In my present job,
I cannot do that personally because of Bosnia. However, we have —
my Deputy Assistant Secretary of State for Economic Affairs was
the principal deputy in the Economic Bureau, and he has been
tasked with this full time, and we are doing a very strong job.

Now, specifically, we analyze and look at the economies of all the
countries that the European Bureau and Canadian Bureau is re-
sponsible for, and we have focused recently on two countries in par-
ticular: Hungary and Turkey.

The Hungarian situation is not another Mexico as the outgoing
finance minister said a month ago, but it is dangerous. And, there-
fore, when I went to Budapest, I did something quite unusual. I
took with me a joint State Department/White House/Treasury
team. And we met with the new finance minister and the new head
of the Central Bank in Budapest, and then we met with Prime
Minister Horn at length, and over two-thirds of the conversation
with the Prime Minister was on the economic stabilization package
that the new economic team in Budapest has proposed.

My Treasury colleague, David Lipton, whom I am sure you know
from the Mexico — in fact, he said — to give you a sense or how im-
portant this was, Congressman Leach, David Lipton took time out
of the Mexico negotiations to fly to Budapest just for a day to have
these talks. And we joked that he wanted to go there because he
wanted to go to any country whose currency did not end in a vowel.

Now, the Hungarians have now begun this economic stabilization
package. We have publicly and privately told them how important
it is. We are working very closely with tnem. They understand this.
So we will be in there with them because we do not want to
confront these problems again.

15

And I want to stress I am not predicting that Hungary is another
Mexico. I am saying that if they take the actions they are now talk-
ing about, they will get the IMF standby facility, and they will do
the right thing.

As for Turkey, Turkey is 150 percent inflation; very difficult eco-
nomic and political situation. And for that reason we are now form-
ing up a similar team with Treasury to look at that, and I have
asked Larry Summers to go personally to Ankara.

I think going beyond that level of generality might be unhelpful.
But I want to assure you that in regard to both Hungary and Tur-
key, and any other nations in the region where these problems ap-
pear to rise, we will work very closely with them and with the Eu-
ropean Community, European Union, and, of course, most specifi-
cally, with Germany.

Mr. Leach. Well, I appreciate that, and my time has expired.

Mr. Holbrooke. I want to really stress to you I am glad you
raised that question because it does not normally come up, and yet
in the long run it is as important as any other issue we are talking
about.

Mr. Leach. Fair enough, but let me come back just for a second.
Let me say, first of all, both economies, you indicate, are smaller
than Mexico's. I am even more concerned about another currency
that ends in a vowel in Western Europe.

And in that regard, there are institutional as well as country-to-
country issues that have to be dealt with, and I will provide you
some material maybe separate from this, but we are not simply
talking individual government-to-government relations. We need
an international framework to deal with these issues, obviously in
a burden-sharing kind of way. And in many ways the Mexican
issue to me is one of eyebrow raising dimensions in terms of all
other parts of the world; not simply the Mexican circumstance it-
self.

Thank you.

Mr. BEREUTER. The gentleman from New York, Mr. Engel, recog-
nized for 5 minutes.

Mr. Engel. Thank you. I thank you, Mr. Chairman. Ambassador
Holbrooke, it is good to see you.^

On January 4, the President wrote to me with regard to the situ-
ation with Kosovo. I have been very active in the situation with
Kosovo. This is what he said: "There are a large number of issues,
including Kosovo, that I believe must be addressed before Belgrade
should be freed of U.N. sanctions and able to return to the inter-
national community."

For the past year and a half at this committee, Secretary Chris-
topher assured me that there would be no lifting of sanctions on
Belgrade until the Kosovo issue was resolved. Deputy Assistant
Secretary Frazier said the same thing in a hearing that I con-
ducted for Mr. Hamilton last year in the former Europe and Middle
East Subcommittee. Secretary Tarnoff has said the same thing.
And, of course, President Clinton, as I mentioned, wrote to me in
the letter saying the same thing.

Only 1 month after the President's letter numerous media re-
ports announced that the United States is willing to lift sanctions

16

upon Serbia if it made a specified list of conditions, and Kosovo
was not even mentioned.

In his letter to me, President Clinton also pledged, "Our decision
of whether to support suspension of any sanctions will be made in
close consultation with Congress." I found out about the policy
change by reading the Washington Post and the New York Times.
I received neither a briefing regarding the possible lifting of sanc-
tions, nor a notice of its likely occurrence.

So obviously I am quite disturbed that the President violated his
clear pledge to me, and I would like to know why American policy
has been changed so soon. A longstanding American policy has
been that some sanctions should remain in place until the Kosovo
issue is resolved.

Is this still American policy? And if not, why not? And the fact
of the matter that Milosevic and his henchmen did not accept the
American offer to me is irrelevant. It is very disturbing that we
made the offer in the first place. So I would like you to comment
on it, please.

Mr. Holbrooke. Congressman Engel, first of all, let me express
admiration and support for your concern for the problem in Kosovo.
I share it completely.

I do not, however, believe that the President violated his pledge
to you. We have not lifted the sanctions. There is a suspension of
very limited nature concerning sporting events and cultural events
ana passenger flights which can be turned down — which can be ter-
minated at a 100-dav interval anytime we wish it, if necessary. It
was done because of the decision and the action by Milosevic not
only to allegedly close the border between Serbia and Bosnia, and
I use the word "allegedly" because it is not 100 percent, but it is
way, way down from what it used to be, but because, and this was
critical, because of his decision to allow international monitors on
the border. Those monitors including a large number of Americans.

And for this and in furtherance of the fact that he accepted the
contact group plan, we felt that it was appropriate to go along with
this limited measure, and that is where we stand. It will be revis-
ited and reexamined on a periodic basis, and the next such review
comes up next month.

Mr. Engel. But it is not only the limited number of sanctions
which have been lifted. It is, from what I understand, if Milosevic
had accepted certain proposals, which he obviously did not accept,
that many more of the sanctions would have been removed. And
what disturbs me is as if the whole Kosovo issue was just thrown,
not even to the back burner, frankly, just thrown away. I think
that what this does, quite frankly, is to perpetuate the feeling that
we state one thing and then a month later, out of convenience, just
disregard it. To me it is no wonder that the Belgrade regime or the
Bosnian Serbs think they can just do whatever they want with im-
punity. We have drawn the line in the sand 16 different times, and
have moved it 16 different times.

I would just implore you and the administration not to forget the
Albanians in Kosovo who, in my opinion, live under the worst
human rights abuses. Kosovo has the potential to make Bosnia
look like a tea party if we let the Belgrade regime have its way,
and I just do not think we ought to acquiesce in any kind of com-

17

plicity with them. If they do not take care of the situation in
Kosovo and restore all rights to the Albanian majority there, I do
not think we ought to do business with them at all. And I do not
believe, from what I have seen and everything I have read and
studied, that Belgrade has plugged the leaks in terms of arming
the Bosnian Serbs. There might be some lessening of it, but planes
are flying and helicopters are violating the no-fly zone. I just think
that what we do is send the absolute wrong message to Belgrade.

Mr. Holbrooke. Well, let me be clear that if the violations that
you refer to, and there is some considerable dispute about what ac-
tually happened in those helicopter incidents. Our intelligence com-
munity, the U.N. observers, all give different accounts. But if these
violations prove to be substantial and serious, I would personally
favor terminating the suspension of the Phase I sanctions. And I
think Mr. Milosevic should be under no illusions about this. That
is not an automatically renewable lifting.

Secondly, I assure you that we share your concern for the situa-
tion in Kosovo. I was in both the former Yugoslav Republic of Mac-
edonia and Albania recently, discussing this issue. We meet regu-
larly with Dr. Rugova. I am looking forward to meeting with him
at the earliest possible opportunity. And we have never talked
about ending the sanctions. We have talked about suspending
them, and keeping enforcement regimes in place, if necessary.

Mr. BEREUTER. The time of the gentleman has expired.

The gentleman from New York, Mr. Houghton.

Mr. Houghton. Thank you very much, Mr. Chairman.

Mr. Ambassador, I am sorry I am late. I was over at a meeting
with Ambassador Kantor, and he is on his way, as you know, to
China.

Maybe you will bear with me because I have not been here for
the testimony and some of the other questions. But I really have
just two questions. One is sort of a generic. The other is rather spe-
cific.

The generic question, if you sum up everything you have said,
and I have not heard a lot of that, what do you think is the single
most important issue that the administration and Congress should
work on together as we look over the next hill for the next 2 or 3
years?

And, secondly, a more specific one, tell me the problem with H.R.
7 and why that is such an obstacle to the administration.

Mr. Holbrooke. In regard to your first question, Congressman
Houghton, I think it is hard to list a single issue. I believe in a bi-
partisan foreign policy, which does not mean that we all agree
automatically on every single thing. But we face two different prob-
lems which we can work on together.

One is the crisis in Bosnia, which is immense and self-evident,
and we have discussed it at some length already this morning.
There are honest differences among us because the problem is so
immensely difficult.

The second issue is working together, and this goes back to com-
ments that Congressman Bereuter mentioned earlier, to make clear
to Europe that we have a firm unbreakable commitment to remain
a European power. This goes back to a question that was raised be-

18

fore you arrived concerning whether NATO is being subordinated
to other institutions.

The answer is no. But the very fact that the issue arises means
we have to speak with a clear voice on this. The United States
must continue to lead in Europe, and that, I might add, takes some
resources.

I am constantly puzzled by the fact that Members of the Con-
gress will assert in the same statement that we must remain num-
ber one, and then slash every conceivable request for resources to
support that goal. You cannot just do it by saying we are number
one. You actually have to put some resources behind it.

Now, in regard to H.R. 7, there are many aspects of H.R. 7, some
of which are not in my direct jurisdiction. But in regard to NATO
expansion, we support NATO expansion. We have led the effort to
begin the NATO expansion process. This year, under American
leadership and pressure, we will begin to present to the 25 nations
of the Partnership for Peace, ranging from Finland to Poland, from
Warsaw to Hungary, the process for membership.

Some people in the Congress think we are going too slow. Others
think we are going too fast. But I would stress that any new mem-
ber of NATO will constitute a bilateral security treaty between the
United States and that country, and will require the ratification by
the U.S. Senate by a two-thirds vote.

And under Article 5 of the NATO treaty, an attack on one NATO
nation is an attack on all. It is the most solemn commitment the
United States can make. We favor extending that commitment,
that security guarantee, to countries in Central Europe as they
qualify and on an individual basis.

H.R. 7, in its original form, listed four countries as a group and
a specific date. I find myself in an anomalous position. I support
the goal expressed in H.R. 7, but that is not the way to do it. It
draws a new division line in Europe, and says these four, but not
the others. Why those four? And what about problems among those
four? One of the four is Slovakia. Another one is Hungary. They
have a serious unresolved problem between them.

As I mentioned earlier in answer to Congressman Lantos' ques-
tion, we have encouraged a resolution of that problem. And as
President Clinton said in Cleveland, nations that have unresolved
territorial problems, are not democratic, need not apply.

So we suggest, with all respect to that part of H.R. 7, because
we are well ahead of the drafters of H.R. 7, we are actually doing
something about it, we suggest that specific countries and specific
dates are not in the interests of the goal which we share.

Mr. Houghton. Can I just interrupt just a second? I know my
time is up.

But are you worried about the process or are you worried about
the countries? In other words, are you worried about Congress
micromanaging and doing things it ought not to do, or are you wor-
ried that those are the wrong countries?

Mr. Holbrooke. I worry that listing four countries and not list-
ing others this early in the process disorients and disrupts the
process. What about the Baltic? What about Romania? Why coun-
try x and not country y?

19

I would like your body to change that part of the bill so that it
asserts the goal, and if you want to say we are moving too slowly,
fine. I welcome the pressure from the Congress. I think Congress
should put as much pressure on us as possible here. But do not say
these four countries and not others, because you are going to cause
the very problem you are trying to avoid.

And all of us know that in historical mythology, I think the facts
are somewhat different, Dean Atchison's February 1950 speech lay-
ing out America's new security perimeter led to and encouraging
North Korea to attack South Korea. I do not happen to believe that
that is exactly why the war began because General McArthur had
laid out the same line earlier.

But leaving aside history, if your body lists four countries and no
others, you are going to create a new division in Europe when our
goal, and I believe your goal, is a united integrated Europe with
stability throughout Central Europe. So we respectfully ask that
the specifics be muted, but the goal be reaffirmed.

Mr. Bereuter. Thank you. I would say for the record that while
the four countries are still identified, the date has been eliminated.
The second tier specific countries have been eliminated from the
bill, and as a general opening of other countries that are emerging
from communism, and former Soviet Union or the former Yugo-
slavia.

Mr. Holbrooke. I am very appreciative of those changes. They
help, but may I just say when I was in Bucharest, they really were
upset. And when I went to Budapest, the Prime Minister of Hun-
gary said do not create a division between us and Romania because
it will exacerbate tension in the region.

Mr. Bereuter. Well, Mr. Secretary, it is an arguable point, but
I hope that in Bucharest they are doing some things differently
that perhaps they would be mentioned in a future bill.

Mr. Holbrooke. I made that point also.

Mr. Bereuter. The gentleman from Indiana recognized.

Mr. Hamilton. Thank you, Mr. Chairman.

Mr. Secretary, we hear repeated allegations about unmarked
transport planes of the type only in the inventory of the United
States and Turkey, making supply runs into Tuzla, to support the
Bosnian forces.

Do you know anything about that at all?

Mr. Holbrooke. I have read the reports. I have asked for better
intelligence. I am getting conflicting reports on that as well. I have
asked the people in the region about these planes. I do not know
exactly whose planes they were, but they were not American
planes.

Mr. Hamilton. Would you keep me informed about it?

Mr. Holbrooke. Certainly will.

Mr. Hamilton. Are we going to

Mr. Holbrooke. And please keep us informed if you get any in-
formation too.

Mr. Hamilton. All right.

Are we going to reinforce the 500 troops we have in Macedonia?

Mr. Holbrooke. I can answer you with a firm only if necessary.

Mr. Hamilton. No specific plans to do so?

Mr. Holbrooke. No, sir.

20

Mr. Hamilton. All right.

Mr. Holbrooke. I know this has been talked about in the press,
that Secretary Perry has mentioned it. And I think perhaps it got
a little over-reported. He is talking about, and this goes back to our
earlier colloquy, he is talking about the need to do what is nec-
essary there if the situation were to deteriorate significantly in the
other part of the area, Croatia or the area that Congressman Engel
mentioned earlier.

Mr. Hamilton. Let me ask a question on NATO expansion. We
are cutting back our forces in Europe, 300,000 to 100,000; a very
substantial cutback. We are talking about expanding our security
commitments. You are in favor of it. You indicated everybody is in
favor of it.

Why is it in the U.S. national security interest to expand NATO?
And why are you advocating it at the very time when you are
drawing down the military assets in the region to support that
commitment?

Mr. Holbrooke. Oh, I am glad you asked that question, Con-
gressman Hamilton. It goes back to Congressman Houghton's ques-
tion as well, and I think this goes to the very core of America's na-
tional interests in Europe.

Can we leave NATO as a group of the 16 nations which happen
to fall to the western side of the Iron Curtain based on where the
Red Army was in the summer of 1945?

I believe the answer is no. I believe that if we left NATO un-
changed in its present configuration, it would become irrelevant.
But the original NATO was designed as an anti-Soviet organiza-
tion, designed to stop a Red Army thrust through the Folda Gap
in the central plains of Europe. There is no Red Army. There is no
Folda Gap. The threat is gone.

What is NATO's new mission? Why is it still relevant? There are
many reasons for this. Central Europe, as I said earlier, is the seed
bed of war, revolution and instability in Europe during the century,
and that includes the Balkans, where the failure of the Western
leaders to act earlier, which I believe is the greatest collective fail-
ure of the West since 1938, led to the tragedy or contributed great-
ly to the tragedy in Bosnia. And therefore, I believe, it is impera-
tive for us to show the countries of Central Europe that having es-
caped communism and started the difficult road toward democracy,
and as Congressman Bereuter said a minute ago, some of them, no-
tably Romania, have a long way to go, and others, but nonetheless
we must encourage it. We must not leave them outside the institu-
tions of the West. We cannot leave this an elite club.

Mr. Hamilton. Well, we are drawing down our assets, so what
are we doing? Are we essentially giving a security guarantee that
is nuclear?

Mr. Holbrooke. If a country joins NATO, and I repeat again, it
will require the consent

Mr. Hamilton. I understand.

Mr. Holbrooke [continuing]. Of two-thirds of the Senate, that
will be a full membership with Article 5 guarantees, but it does not
necessarily mean American troops on their soil. There are countries
in NATO today which have no American troops on their soil, but
have the guarantee.

21

Is it a nuclear guarantee? Of course. It is a full guarantee.

Do I ever see a reason for that to be invoked? No, I do not.

Let me make clear on the draw downs, that we drew down be-
cause the size of our forces were not necessary given the changing
nature of the threat. But we will keep 100 — it is actually 109,000
troops in Europe; most of them in Germany, and that will be suffi-
cient in the current situation to meet those security needs. And I
assure you, given — particularly given logistical lift in the contribu-
tions of other countries, but I assure that the draw down does not
weaken our ability to deal with the new and significantly reduced
challenges.

Mr. Hamilton. You referred a moment ago to the differences be-
tween Hungary and Slovakia. Let us suppose that a fight breaks
out, and we have a NATO commitment. Does that mean you are
going to put U.S. forces on the ground there to deal with that,
NATO forces?

Mr. Holbrooke. Obviously, Congressman Hamilton, the answer
is no. But I would answer you with the prior statement that I do
not believe that either country, and this goes back to my concern
about that element of H.R. 7, I do not think either country is going
to get into NATO when they have this kind of situation unresolved.

Now, when I said this in Bratislava and Budapest, and I made
this comment to the governments, the answer was what about
Greece and Turkey. They have a problem. They have come very
close to war several times. There was the fighting on Cyprus in
1974.

And the answer really is, quite frankly, that was the cold war.
And I hope that your body will support us on this because we need
to send a strong message to Central Europe that the road they
want — associations with the institutions of the West, including
NATO — requires them to get these ancient legacies, the Treaty of
Versailles, and the Treaty of Trianon, and the Yalta and the Pots-
dam, behind them, and look to the future.

I am very glad you mention this because it is a source of great
concern to us.

Mr. Hamilton. Mr. Chairman, I will just have one final question.

As you know, the House recently voted to cut money in the pro-
gram to provide housing for Russian officers' resettlement. Tell us
what the impact of that is.

Mr. Holbrooke. Well, Congressman Hamilton, I cannot under-
stand that vote. We for 50 years, for 55 years, the Congress of the
United States, backed up by every administration from Roosevelt
on, said that the incorporation of Estonia, Latvia and Lithuania
into the Soviet Union was not something we recognized.

Last year the administration, led by a personal effort by Presi-
dent Clinton, completed the negotiations which got the Russians
out of these countries, a historic milestone. There was a price in-
volved. It was not a very high price considering the trillions of dol-
lars we spent in Europe since 1947. I do not understand this.

There was $160 million, if my memory is correct. The recision
was $110 million. More than that has already been spent. Please
forgive me if I get the numbers wrong. I simply — earlier somebody
talked — Congressman Lantos, about moral authority of the United
States. What kind of moral authority are we going to have if

22

after — if this relatively small amount of money for such a huge his-
toric event is subject to a recision after it has already been spent,
and when the greatest issues are involved? And how is that con-
sistent with those elements of H.R. 7 which Congressman Hough-
ton raised?

If I show some concern here, it is because, with all respect to the
Congress, and I have worked now for almost 30 years with the
Congress, and I respect their role, this was an action that makes
no sense to me.

Mr. Hamilton. Thank you, Mr. Chairman.

Mr. Chabot. Mr. Chairman.

The Chairman. The gentleman is recognized.

Mr. Chabot. Yes, Ambassador, I would invite you to come back
to my district in Cincinnati some time, and perhaps justify paying
for housing for former Soviet officers when we are making the sub-
stantial cuts that we are making now to finally try to balance this
budget, which I would say previous Congresses have dismally
failed to do, and that goes back with

Mr. Holbrooke. I would be happy to go to Cincinnati for that.

Mr. Chabot. OK. Come to my district any time and

Mr. Holbrooke. And you have a lot of people in the Cincinnati
area who understand Central Europe very well, and I do not under-
stand how a great nation — I understand our domestic problems,
and I share your concern, and I understand the constituents did
not vote for foreign aid. But as the New York Times poll last week
showed, the American public has a gross misunderstanding of the
size of our foreign aid. The polls said they thought it was 15 per-
cent. It is less than 1 percent of the

Mr. Chabot. But they do understand housing Soviet officers with
American taxpayer dollars. And you mentioned before in your pre-
vious testimony that you could not understand, or that the fact
that we are no longer — we want to be a number one nation, first-
class, we want to be number one, but we are not willing to spend
the resources anymore to accomplish that.

I would submit that allowing this deficit to continue to grow at
the rate it has over these years, and for the administration to send
over a budget recently which basically just said, well, we are not
going to deal with it, I think that was irresponsible. And I would
submit that we are finally taking the bull by the horns and trying
to do something about balancing this budget.

And so I think I felt very good about voting for that, and I would
do it again. Thank you.

Mr. Holbrooke. Well, I think we are confusing two critical is-
sues here. The budget deficit is critically important. But to, in ef-
fect, renege on an exiting commitment of historic importance is not
consistent with our Nation. In a budget deficit this big, $110 mil-
lion is not the issue. It is an existing commitment

Mr. Chabot. But we say that about everything, do we not? It is
only $110 million, you know.

Mr. Holbrooke. I am happy

Mr. Chabot. That is a small piece. Everything is a small piece.
But when you add those things up, it is real money.

Mr. Holbrooke. Congressman, with all due respect to the prior-
ity you assert, which I share, the road — that road leads to the end

23

of the United States as a great world leader. We cannot pretend
that we can walk away from international commitments. And for
people not to see that this is the — that this $110 million is the end
of a long historic 55-year process in which people in both parties
in this Hill regularly fought for the independent status of Estonia,
Latvia and Lithuania, and finally achieved it at a cost of hundreds
of billions of dollars, that we cannot finish this out, I think seri-
ously risks undermining our foreign policy.

This is not money for Soviet officers. It is the final settlement of
a historic goal achieved in a bipartisan way.

Mr. Chabot. I would reach out and ask that the administration
join with us in giving us an alternate to cut that $110 million, and
the other $199 billion that it failed to find the cuts for in the recent
budget. So let us work together and try to make those cuts. We cer-
tainly did not get the cooperation from the Senate recently.

The Chairman. I thank the gentleman.

Mr. Secretary, the governments of our closest allies in Europe
have been opposed to lifting the arms embargo in Bosnia on the
grounds that it will raise the level of violence and widen the con-
flict.

Given the high probability of a resumption of heavy fighting by
the end of next month, one could argue that present policies may
very well produce the very thing our European friends fear from
lifting the arms embargo.

In your discussions, recent discussions with our allies, have you
detected any willingness on their part to reevaluate their policies
that they have advocated in the start of the conflict, and fully con-
sider lifting the arms embargo?

Mr. Holbrooke. Not on that issue, Mr. Chairman. They have
not changed. Their position and ours have a kind of a paradoxical
contro-plental quality. We care more, but we do not have resources
on the ground. They have thousands and thousands of troops on
the ground at risk, and their interpretation of the consequences of
lifting the arm embargo are that it puts those people at risk. So
they nave said flatly unambiguously if the arms embargo is lifted
we are taking our people out: the British, the Canadians, the
Dutch, the French, the Danes, all our NATO allies who have put
people there.

The Chairman. Were you urging lifting of the arms embargo
when you discussed these with them? Have you urged them to re-
consider their evaluation?

Mr. Holbrooke. Yes, I was. That is our position, a multilateral
lift. We submitted a resolution in the Security Council as we com-
mitted to do in discussions with the Congress on September 27 of
last year. We did not submit it to a vote because we did not have —
we had well under half the members of the Security Council ready
to support us.

The Chairman. Now, Mr. Secretary, Mr. Jacques Santer, head of
the European Commission, recently stated that, "Security issues
must be resolved in Eastern Europe before states of that region
could expect to join the European Union."

On the other hand, some observers have argued that, "It would
be best for the European Union to allow Poland and other states
of the region to join its ranks and gain access to Western European

24

markets as soon as possible since economic expansion in those na-
tions would do more to lock in political and economic reforms than
extension of any military alliance."

What is our Nation's position on the timing of European Union
expansion into Eastern Europe? Should we wait until security ar-
rangements of the countries in that region have been finalized?

Mr. Holbrooke. Very important question, Mr. Chairman. One
that President Clinton and Chancellor Kohl discussed at length.

There is a rough linkage between EU expansion and NATO ex-
pansion, but not an ironclad one. You know, if you give the coun-
tries of the region a choice between EU and NATO membership,
they might well say EU membership is more valuable. The Euro-
pean Union is on a very slow track, Mr. Chairman, because they
have to go through their intergovernmental conference first next
year. And every European I have talked to has said there will be
no new member of the EU until early in the next century. They
also have to converge their economies, and the specific and vital
case of Poland, the agricultural issue will create a huge problem,
particularly with the French.

Finally, the Germans end up paying a large bulk of the bill for
each new member, and the Germans are spending $100 billion per
year on the eastern states of Germany that were once Communist
East Germany.

So you have a series of events converging which slow down EU
expansion. And I think that Santer, I do not understand exactly
what he had in mind because clearly the two ought to move in
rough parallelism.

But let us be clear, not every EU member will be a NATO mem-
ber, and not every NATO member is an EU member: Canada and
the United States for one.

The Chairman. Thank you, Mr. Secretary.

Mr. Smith has not had an opportunity to participate in the first
round. Mr. Smith.

Mr. Smith. Thank you very much, Mr. Chairman.

I regret not hearing your full testimony, Mr. Ambassador. We
have a hearing going on on veterans on the Persian Gulf Syndrome
which is obviously a very important issue. So they are running
back and forth. But I do have a couple of questions, and we will
submit a few as well.

As I think you know, there are reports today, and perhaps you
touched on it in your testimony today, that the Government of Cro-
atia may yet agree to extend trie stay of U.N. forces in that country
provided certain changes are made in its mission. These reports
add that this potential softening of Croatia's position comes after
pressure from the United States and other nations, and after your
own visit to Zagreb.

The key change, as I understand it, is that Croatia is suggesting
that the U.N. forces mission is a change from an armed patrol of
the line of combat between Croat forces and Croatian Serb forces
to an unarmed patrol of Croatia's internationally recognized bound-
aries with Bosnia and Serbia. Such a change would require the per-
mission of the Serbs, which is unlikely to be given.

A complete withdrawal of U.N. forces from Croatia is under-
standably alarming to some, but how would continuation of a U.N.

25

presence in Croatia help to implement the Vance Plan? Would it
accomplish anything other than prolonging the present stalemate
and preventing Croat refugees from returning to their homes? Is it
the policy of the United States that Croatia should allow U.N.
forces on its territory for an indefinite period of time? And if so,
is it the policy of the United States that Croatia should acquiesce
in the permanent loss of Serb held regions?

Mr. Holbrooke. Congressman Smith, as I said earlier, I hope
you will forgive me if I take a pass on answering the details of the
question because they are part of the very intense and private dia-
logue we are now having.

I noted earlier that the Ambassador from Croatia is here. I guess
he is still here. And he has been listening very carefully to the com-
ments of you and your colleagues on the importance of this issue,
which we share.

The Vance Plan was not fully implemented. That is the reason
the Croatians, quite understandably, want some improvement in
the situation. We do not believe that their proposed solution is any-
thing other than a recipe for a dangerous widened war, and we are
now engaged in intensive discussions with them to see if that can
be avoided.

I would be happy to discuss this further with you in private.

Mr. Smith. That was going to be my next question. I think that
would be very helpful, not just for me, but for many members of
the committee who are concerned about this issue. And I think that
is

Mr. Holbrooke. I will be returning to Europe later this week to
continue the discussions.

Mr. Smith. Thank you.

On the issue of Cyprus, I understand that the President's envoy
for Cyprus is in Turkey. Have you gotten any preliminary read out
from his discussions there?

Mr. Holbrooke. No. I think his meetings are just beginning as
we are talking here in Ankara.

May I just ask my colleague for 1 minute?

[Pause.]

He will be meeting with the Prime Minister in about 2 hours.

Mr. Smith. OK

Mr. Holbrooke. But I would like to note again that the Euro-
pean Union's decision to approve the customs union with Turkey
3 days ago is a major step forward, and I hope begins a very posi-
tive process.

We support the accession talks between the European Union and
Cyprus for membership. American diplomacy was heavily engaged
in the last month in encouraging the Europeans to make tnis
equally important decision, and we look forward to the day when
a Cyprus, by which I mean a federation of both communities is a
member of the Union.

Although in answer to Chairman Gilman's earlier question, I
would only note that the time table for all new EU membership is
going to be some time in the next century.

Mr. Smith. My time is almost concluded.

Several of us have introduced the Humanitarian Corridors Act.
I am the prime sponsor of it, but I am joined by a number of distin-

26

guished members on both sides of the aisle who are concerned
about the continued deprivation of basic humanitarian aid in Ar-
menia.

Do you see any movement on the part of the Turks vis-a-vis that
issue?

Our hope is that if there is not movement, to move this legisla-
tion, is a very serious effort. It is not the sense of Congress. It is
not meant to be. And I do hope the Turks get the message that de-
priving the transshipment of U.S. humanitarian goods and services
is a violation of basic human rights, and particularly when these
people are starving and hurting, and I know that we want to see
a resolution in Nagorno-Karabakh and the other issues that the
Turks point to. But when you are talking about women and chil-
dren being deprived of medicines and other kinds of basics, this is
an issue that I hope the administration is pursing vigorously.

Mr. Holbrooke. I support the motives and goals of this legisla-
tion, Congressman Smith. The reason the administration has res-
ervations about it is because we believe that in the current climate
of relations between Turkey and Armenia, we will be able to ac-
complish the goal you seek, or encourage the goal you seek in a dif-
ferent manner.

There are significant signs now Ankara is trying to improve its
relations with Armenia. We are really working hard on this. The
pipeline decision, which you are familiar with, was a major step
forward. If that pipeline runs through Armenia, it will force a co-
operation. Certain other things are going on which the Turkish
Government talked to me about in private.

I can think of nothing that would be more satisfying than to con-
tribute to an improvement of relations between these two countries
given the genocide events of an earlier era. And although disputed,
obviously, a terrible event took place earlier in this century, and
it left a permanent legacy. And we will work closely with you, but
we do not feel this bill is the right way to move.

The Chairman. The gentleman's time has expired.

Mr. Smith. I thank you, Mr. Ambassador.

The Chairman. Mr. Engel.

Mr. Engel. Thank you, Mr. Chairman.

Ambassador Holbrooke, let me say that I agree with your state-
ments on the $110 million for the Russian troops. I think it is very
unfortunate that at a time when we ought to become more engaged
in the world to consolidate the gains that we have made with the
collapse of the Soviet Union, some of our colleagues would retreat
into isolationism. I think it is a terrible mistake.

I think if we are worried about balancing the budget, there are
lots of tax breaks we are giving to wealthy people, and other things
that are happening. I do not think that it ought to be done by
America running away from its international commitments. I could
not agree with you more.

I want to take you back for a minute to Kosovo. I have been ar-
guing for many, many years that the United States ought to open
a USIA office in Prisntina, the capital of Kosovo, for a number of
reasons.

I think it is important to see an on-the-ground presence of the
United States in that part of the world. I think it would be impor-

27

tant psychologically to fly the American flag. I think it would send
a very clear message to Belgrade that we are watching them very
closely, and will not allow further indignities heaped upon the Al-
banian population there. Under the Bush administration, I was
very frustrated because all we got was gobbly-gook in terms of
American personnel not being safe, and therefore, that is the rea-
son why we have not opened it. I reject that. I am getting the same
kind of gobbly-gook now under the Clinton administration, and I
am very frustrated because I do not believe for a minute that it
would be unsafe for our American personnel to have a USIA office
there. I think that is just an excuse that is being used. And I would
just urge that we open one as soon as possible.

Mr. Holbrooke. Mr. Engel, I am fascinated by your suggestion.
I apologize for the gobbly-gook. I must confess that I did not know
of this proposal. It may have gotten bottled up in the bureaucracy.

The USIA is under fantastic pressure now to close down all sorts
of posts. When I was in Germany, I was resisting it on other
grounds. But I like your idea on its merits. However, in view of the
extremely tense situation in Kosovo created by the presence of Serb
paramilitary and military forces, President Clinton decided in Jan-
uary that while strong arguments exist for opening an office, he
felt that safety and security concerns for the American staff of such
an office militated against doing so at this time. I am currently re-
viewing the situation with a view to opening an office there, once
circumstances are right.

Mr. Engel. OK, I would appreciate that.

Mr. Holbrooke. I know they are going to — and even leaving
aside all the other issues, there is going to be a budgetary issue.
But let me turn to it, and I understand your motives. I think it is
a terrific idea.

Mr. Engel. It is in U.S. law right now. It is just a matter of
opening it.

Mr. Holbrooke. Since you have mentioned Kosovo again, I do
want to stress that this situation with the university in Tetove is
serious. The New York Times Op Ed page piece Saturday was a
very intelligent, well informed piece. I have talked to both Presi-
dent Gligarov and President Berisha about it. I expect to see
both — I hope to see both men in Copenhagen this weekend, and I
will talk to them again. And I would hope that any influence you
have to calm this thing down be used, because this is the classic
kind of spark that can set off a dangerous situation.

Mr. Engel. Thank you. You anticipated my next question.

Let me ask you, what is the status of the situation right now
with negotiations involving the former Yugoslav and Republic of
Macedonia, and the dispute with Greece involving the name, the
flag, the constitution and everything else? I know you have been
very involved with that.

Mr. Holbrooke. The President's emissary for this issue, Mat
Nemetz, and I met yesterday in New York. The Foreign Minister
of the former Yugoslav and Republic of Macedonia will be in the
states starting this weekend. Now that there is a President of
Greece as of yesterday, which was a benchmark issue which we
passed, and the Foreign Minister is coming here, I hope that we
can make progress.

28

It has not been so far in my brief tenure as Assistant Secretary
one of the most successful efforts we have had. It does not, for ex-
ample, match our achievements on the Albanian-Greek front where
the Omonia Five were released. In fact, I am going to meet with
one of the prisoners who is an American citizen this afternoon. The
Greek Foreign Minister is going to Albania. There has been a dra-
matic improvement in Albanian relations in the last month and a
half, and I think American diplomacy can take some share of the —
I do not want to say credit, but we can feel we did the right thing.

Mr. Engel. No credit. I think credit is a good word because I
think we did do the right thing.

Mr. Holbrooke. Well, I think in the end it is the people on the
ground. But we have been actively engaged in all fronts: Cyprus,
Albania, former Yugoslav and Republic of Macedonia. We have
made — we have not yet made enough progress on the Macedonian
issue, but we are working on it, and I hope within the next few
weeks to be able to report to this committee progress.

The Chairman. The gentleman's time has expired.

Mr. Engel. Thank you.

The Chairman. Mr. Houghton.

Mr. Houghton. Yes, thank you. Just one final question. We have
got a vote and I will not take a great deal of time.

Mr. Ambassador, we are going through a reprioritizing of every
expense dollar in this country. And it is painful for a lot of us, but
I think we are heading in the right direction as you can see by the
fluctuations in the international monetary market that when the
Senate turned down the balanced budget amendment, not only due
to that, but other things, there was a real scare out there. We must
get our expenses in line with our revenue.

In the process, we must take a look at those things which are
important to you and to all of us. I happen to agree with you. I
happen to be somebody who feels that we cannot turn our back on
95 percent of the world's population.

However, I do think it is important for you to help explain why
what you do and what this country does overseas should be contin-
ued. You say it is very difficult. You cannot believe people do not
see certain things. You are dealing in an area of expertise far above
anything that I really understand. I do know and can associate
with what Mr. Chabot says.

We go home to our districts and people say why? Why do you
spend money this way? Why do you spend monev on NASA? Why
do you spend money on the NIH? And we must oe able to explain
that. And we really are not versed in that, and people like your-
selves must help put this whole thing in perspective. And I have
never known since I have been down here a more important time
to put a fine point on those issues which internationally are of im-
portance to us.

Mr. Holbrooke. Congressman Houghton, I do not want to pre-
tend that the high priesthood of the foreign policy establishment
has some kind of secret solution here. It must be a bipartisan effort
and must have Americans support.

I would only point out to you that the Marshall Plan was op-
posed by two-thirds of the American public and popular opinion
polls. The leadership of both branches, Republican Congress, Demo-

29

cratic President, decided it was in the national interest, and made
a bipartisan case. But it never had overwhelming American sup-
port. It is a myth that the Marshall Plan just walked through the
Congress.

Mr. Houghton. But if I could just interrupt, Mr. Ambassador.

Mr. Holbrooke. We have a more difficult situation now.

Mr. Houghton. Yes.

Mr. Holbrooke. Because it is not a clear cut clear and present
danger. If the administration has not made the case as well as it
should have to the American people, we will try harder. We wel-
come the support of members of both parties on these issues, and
we will fight them out one by one, and reach compromises.

Mr. Houghton. Yes.

Mr. Holbrooke. I understand fully why the American public
would rather spend money on American housing than housing for
former Soviet officers. It is up to us to explain that it is in the na-
tional interest and we can find a way to do both.

Mr. Houghton. Right. Well, Mr. Ambassador, I do not think try-
ing harder is enough. I really think it is a very critical point in our
history, and we must do the unusual in terms of explaining our
part in this world, and it is up to people like yourself. I do not
throw it on your shoulder as your responsibility. I do not point the
blame at you. You are not to blame, but we are all to. But we are
going to be taking deep cuts. We are going to be affecting many
programs. And so this has to be understood.

I listened to General Marshall give that speech. I was part of
that program. I understand it. But those days are gone. We have
a different atmosphere now, and it must be explained.

Mr. Holbrooke. I accept that.

And by the way, you talk about the deep cuts. While I was Am-
bassador in Germany we presented a plan to the Department for
20 percent cut in the next 4 years in the Embassy personnel alone,
and we are now going back through the European Bureau, and we
are cutting more and more and more. We are trying to cut.

It is why an issue like Congressman Engel's suggestion for USIA
post in Kosovo gets doubly tricky, because his concept is correct.
But because it is now a zero sum gain, we will have to cut some-
where else. We are going to do it and we will do it with you.

This particular issue of the housing I feel particularly strongly
about for reasons we both understand.

Mr. Houghton. I understand.

The Chairman. The gentleman's time has expired.

Mr. Houghton. Thank you.

The Chapman. Mr. Bereuter.

Mr. Bereuter. Thank you, Mr. Chairman. I just have three
points to make briefly because we will have to go vote.

First of all, congratulations on any role that you played, the
United States collectively, on Turkey's access to the customs union
with the EU. That is very important.

Mr. Holbrooke. Thank you.

Mr. Bereuter. I am interested in, perhaps a response in writing,
as to what kind of burdens Turkey is playing right now or bearing

30

with respect to its role in Operation Provide Comfort, and how the
prospects look for our relationship there. 1

Secondly, on the Southern Balkans, you challenged Mr. Chabot
on the subject of America acting as a great power. I think in the
southern Balkans it is time for America to act as a great power,
to improve our bilateral relationships not only with Greece, but
also with Albania and Macedonia. I am glad to hear about the im-
provement in Albania. The Albanian Enterprise Fund, at least a
couple weeks ago, still was not up and running.

Mr. Holbrooke. Released last week.

Mr. Bereuter. Good, I am glad to hear that.

Mr. Holbrooke. $30 million, plus private, and we are going to
make a major effort in this regard.

Mr. Bereuter. I tell you that I have scarcely run into people
that I thought were more pro-American and pro-democracy and
pro-capitalism than the Albanians, and I do not want to see that
fervor downgraded by our problems there.

Third, I would like to move to Macedonia.

Mr. Holbrooke. May I just say on Albania, Congressman, I
made this one of my major goals to get this fund announced. It was
announced. I share every word you said. I went to Albania for the
first time last month, and I saw exactly what you described, and
we must do what we can for this tiny and incredibly poor little
country.

Mr. Bereuter. Thank you, Ambassador, for your work on that.
I have been pursuing that issue with some interest.

With respect to Macedonia, things are deteriorating there. The
Greeks embargo is taking its toll. Our European allies have been
atypically assertive about ending the Greek embargo. United
States has to be a great power and weigh in on this issue, other-
wise the responsibility for what happens there with that continued
deterioration falls on us as well. We have to have an ambassador
there. It is time. Intransigance on both sides of this issue between
Greece and Macedonia is unacceptable. We have to improve our re-
lationship with Macedonia and with Greece.

If you need bipartisan cover from the Congress, some of us will
give it to you. But it is time to act in that area. I challenge the
administration to act like a great power, and take that step be-
cause the intransigent difficulties we are having there is not get-
ting us anyplace.

Mr. Holbrooke. Thank you, Congressman. I share your goal. I
am operating within a policy which will only allow me to move
there if we get a little bit of progress. We are going to go all out
in the next few weeks. As I said a minute ago, I think the selection
of a President in Greece was an important part of that. We are
going to work very closely with the Greek Government.

I do want to take note now in a positive sense that the Greek
Government made the decision to allow the customs union with
Turkey to go forward. That was a very positive step. I think we
have to work with both our longstanding NATO allies in Greece
and with the people in the former Yugoslavia and Republic of Mac-
edonia. I share your goal.

1 Response to Rep. Bereuter's inquiry appears in the appendix.

31

And I would just say one other thing. Our charge in Skopia, Mr.
Comrass, really is ambassador level, and functions in that way.
But nonetheless I take your point and I understand the difference
between a charge and an ambassador.

The Chairman. Mr. Secretary, we thank you for being with us
today and our patience.

The committee stands adjourned.

[Whereupon, at 11:52 a.m., the committee was adjourned.]

APPENDIX

STATEMENT BY RICHARD C. HOLBROOKE

ASSISTANT SECRETARY OF STATE
FOR EUROPEAN AND CANADIAN AFFAIRS

before

the International Relations Committee

U.S. House of Representatives

March 9, 1995

Mr. Chairman, I would like to thank you for the
opportunity to outline how this Administration is advancing the
President's agenda in a Europe undergoing profound change.

President Clinton's four trips to Europe last year
underlined an inescapable fact: the United States has become a
European power in a sense that goes beyond traditional
assertions of American's "commitment" to Europe. In the 21st
century, Europe will still need the active American involvement
that has been a necessary component of the continental balance
for half a century. Conversely, an unstable Europe would still
threaten essential national security interests of the United
States. This is as true after as it was during the Cold War.

I have elaborated this view at some length in the current
issue of Foreign Affairs and draw on that article for this
statement as well.

By stating that America remains a European power— an
enduring and essential element in the European balance--I do
not intend, of course, to suggest that nothing in Europe has
changed even though the Cold War has ended. Local conflicts,
internal political and economic instability, and the return of
historical grievances have now replaced Soviet expansionism as
the greatest threat to peace in Europe. Western Europe and
America must jointly ensure that tolerant democracies become
rooted throughout all of Europe and that the seething, angry,
unresolved legacies of the past are contained and solved.

Maintaining peace in Europe has traditionally depended on
a complicated set of structures that balanced often-conflicting
interests. Europe's diversity and historic rivalries remain a
determining aspect of efforts to maintain stability.
Disappearance of Cold War structures has left important parts
of Europe without a sense of security provided by a credible
framework. If we are to realize our goal of a peaceful,
democratic, prosperous and undivided Europe, we must work with
our European partners to reestablish a sense of overall
security.

Today, the early euphoria that surrounded the fall of the
Berlin Wall and the collapse of the Soviet empire has yielded
to a more sober appreciation of the problems, new and old. The
tragedy of Bosnia does not diminish the responsibility to build
a new comprehensive structure of relationships to form a new
security architecture. On the contrary, Bosnia, the-greatest
collective security failure of the West since the 1930s, only
underscores the urgency of that task.

Any effort to redesign the new security architecture of
Europe must focus first on central Europe, the seedbed of more
turmoil and tragedy in this century that any other area on the
continent. The two most destructive wars in human history began
from events on its plains, and the Cold War played itself out

(33)

34

in its ancient and storied cities, all within the last 80
years .

Other historic watersheds also have not treated this area
well. First the treaties of Versailles and Trianon, then the
agreements of Yalta and Potsdam, and finally the collapse of
the Soviet empire — those three benchmark events left throughout
central Europe a legacy of unresolved and often conflicting
historical resentments, ambitions, and most dangerous,
territorial and ethnic disputes. If any of these malignancies
spread--as they have already in parts of the Balkans and the
Transcaucasus— general European stability is again at risk.

But if there are great problems there are also great
possibilities. For the first time in history, the nations of
Central Europe have the chance simultaneously to enjoy
stability, freedom, and independence based on another first:
the adoption of Western democratic ideals as a common
foundation for all of Europe. The emotional but also practical
lure of the West can be the strongest unifying force Europe has
seen in generations, but only if unnecessary delay does not
squander the opportunity.

The West owes much of its success to the great
institutions created in the 1940s and 1950s. If those
institutions were to remain closed to new members, they would
become less relevant to the problems of the post-Cold War
world. It would be a tragedy if, through delay or indecision,
the West helped create conditions that brought about the very
problems it fears the most. The West must expand to central
Europe as fast as possible in fact as well as in spirit, and
the United States is ready to lead the way.

NATO

The central security pillar of the new architecture is a
venerable organization: NATO. Expansion of NATO is a logical
and essential consequence of the disappearance of the Iron
Curtain and the need to widen European unity based on shared
democratic values. But even before NATO expands, its strength
and know-how are already playing an important role in building
a new sense of security throughout Europe.

NATO is beginning a historic transformation.- Its core
purpose of collective defense remains, but new goals and
programs have been added: collective crisis management,
out-of-area force projection, and the encouragement of
stability to the east through the Partnership for Peace (PFP) .
Static forces formerly concentrated to meet a possible Soviet
attack across central Europe have been turned into more lightly
armed, mobile, and flexible multinational corps designed to
respond to a different, less stable world.

Two new structures — the North Atlantic Cooperation Council
and the PFP — are specifically designed to reach out to
countries that are not NATO members. In just one year, the
innovative PFP has become an integral part of the European
security scene.

Contrary to a fairly widespread impression, PFP is not a
single organization; rather, it is a series of individual
agreements between NATO and, at last count, 25 other countries
ranging from Poland to Armenia, including Russia. Each
"partner" country creates an individual program to meet its own
needs. PFP helps newly democratic states restructure and

35

establish democratic control of their military forces and learn
new forms of military doctrine, environmental control, and
disaster relief. It provides a framework in which NATO and
individual partners can cooperate in crisis management and
other activities.

PFP also provides a valuable framework for evaluating the
ability of each partner to assume the obligations and
commitments of NATO membership--a testing ground for their
capabilities. And for those partners that do not become NATO
members the PFP will provide a structure for increasingly close
cooperation with NATO — in itself an important building block
for European security.

The U.S. and its Allies have agreed on a robust program of
practical cooperation with Partner states that builds on PFP's
early momentum. For example, NATO will have eleven joint
exercises with Partners in 1995.

No issue has been more important, controversial, or
misunderstood than whether NATO should expand, and if it
expands, why, where, when, and how. NATO heads of state and
government at the January 1994 summit decided the alliance
would eventually expand. This decision was reaffirmed by
President Clinton during his return to Europe last June, when
he stated that the question was no longer whether NATO would
expand but how and when.

NATO has embarked on a two-phase program for 1995. During
the first part of this year, NATO is determining through an
internal discussion the rationale and process for expanding the
new, post-Cold War NATO. Then, in the months prior to the
December 1995 ministerial meeting, NATO's views on these two
issues--"why" and "how" — will be presented individually to PFP
members. This will mark the first time detailed discussions on
this subject have taken place outside the alliance. Then the
ministers will meet again in Brussels in December and review
the results of the discussions with the partners before
deciding how to proceed.

Several key points should be stressed:

o First, NATO expansion must strengthen security in the
entire region, including nations that are not members.

o Second, the rationale and process for NATO's expansion,
once decided, will be transparent, not secret. All Partners
will have the opportunity to hear exactly the same presentation
from NATO later this year.

o Third, there is no timetable or list of nations that
will be invited to join NATO. The answers to the critical
questions of who and when will emerge after completion of this
phase of the process.

o Fourth, each nation will be considered individually, not
as part of some grouping.

o Fifth, the decisions as to who joins NATO and when will
be made exclusively by the alliance. No outside nation will
exercise a veto. —

o Sixth, although criteria for membership have not been
determined, certain fundamental precepts reflected in the
original Washington Treaty remain as valid as they were in
1949; new members must be democratic, have market economies, be
committed to responsible security policies, and be able to
contribute to the alliance. As President Clinton has stated,
"Countries with repressive political systems, countries with
designs on their neighbors, countries with militaries unchecked

36

by civilian control or with closed economic systems need not
apply. "

o Lastly, it should be remembered that each new NATO
member constitutes for the United States the most solemn of all
commitments: a bilateral defense treaty that extends the U.S.
security umbrella to a new nation. This requires ratification
by two^thirds of the U.S. Senate, a point that advocates of
immediate expansion often overlook.

In this context let me briefly state why this
Administration, while leading the Alliance on the issue of NATO
expansion, opposes the approach taken by the House of
Representatives in H.R. 7. We believe this bill would result in
the opposite effect of that intended by many of its sponsors.
It would unilaterally and prematurely declare certain countries
as qualified for NATO membership, writing into law distinctions
that could discourage reformers in countries not named and
encourage complacency in countries that are. The legislation
would complicate the expansion process by needlessly generating
disagreements with our Allies.

The Congress should reconsider H.R. 7. We share the same
goal with respect to NATO expansion. Eh working together
without the constraints of unnecessary legislation we will
reach that goal more quickly.

Fortifying the European pillar of the Alliance contributes
further to European stability and to transatlantic
burden-sharing. It improves our collective capacity to act.
It means establishing a new premise of collective defense: the
United States should not be the only NATO member that can
protect vital common interests outside of Europe.

For these reasons the United States promoted the concept
of the Combined Joint Task Force. CJTF offers a practical
vehicle for making NATO assets and capabilities available to
our European allies, should the Alliance as a whole, including
the US, decide not to participate. It is based on the notion
that Europe's emerging defense identity should be separable but
not separate from NATO. NATO will still have the right of
first refusal to deal with crises that do not automatically
invoke Article 5 of the Washington Treaty, but if the alliance
as a whole chooses not to act, smaller coalitions of willing
members can draw on NATO assets to deal with such crises.

NATO expansion cannot occur in a vacuum. If it did, it
would encourage the very imbalances and instabilities it was
seeking to avoid. In addition to NATO, the new architecture
involves both the EU and other arrangements such as the
Organization for Security and Cooperation in Europe (OSCE) .

THE EUROPEAN UNION

For more than forty years both Democratic and Republican
Administrations have supported peaceful European integration.
The European Union has become a vital partner in trade,
diplomacy and security. Close partnership between the United
States and the European Union is essential to our common agenda
of democratic renewal.

The EU is one of our largest trading partners, with $213
billion in two-way trade in 1994. U.S. imports from the EU
represented 17 percent of total U.S. imports; U.S. exports to
the EU represented 21 percent of total U.S. exports. We are

37

each other's most significant source of direct investment — at
the end of 1992 the EU had more than $219 billion invested in
the U.S., and the U.S. had about $201 billion invested in EU
countries .

Although the European Union is usually viewed as a
political and economic entity, it is an essential pillar of
European security. The integration of western European nations
on the basis of democracy and free market economics has
virtually transcended old territorial disputes, irredentist
claims, social cleavages and ethnic grievances that tore apart
European societies in earlier eras.

Throughout its history the Union has strengthened the
democratic impulse of a wider Europe. The extension of the Union
eastward will be immensely important both politically and
economically. It will integrate and stabilize the two halves
of Europe.

Expansion of NATO and the EU will not proceed at exactly
the same pace. Their memberships are not and will not be
identical, but the two organizations ate clearly mutually
supportive. Expansion of both is equally necessary for a stable
Europe .

THE O SCE

Both EU and NATO expansion are proceeding within the broad
context of a new European security archi tec-ture . Neither is
being pursued in isolation. Integration of Central Europe and
the nations of the former Soviet Union into the OECD, the GATT
and its successor, the World Trade Organization, and such
institutions as the Council of Europe all complement and
support the gradual expansion of NATO and the EU.

But neither NATO nor the EU can be everything to
everybody, and the other organizations mentioned above are
focused on narrower issues. This points to the need in the new
European architectural concept for a larger and looser
region-wide organization that can deal with a variety of
challenges which neither NATO or the EU is suited for
addressing .

Fortunately, the core for such a structure has existed for
some years — the Conference for Security and Cooperation in
Europe (CSCE) . Its 52 nation structure of human rights
commitments, consultations and efforts at cooperative or
preventive diplomacy had begun to fill a niche in the new
Europe. But it was clear by the middle of last year that CSCE,
while offering intriguing possibilities, was wholly inadequate
to the opportunities or the challenge. Under the leadership of
the United States, a significant evolution of this
organization, including a new name, was started in December at
the Budapest CSCE summit.

Where NATO and the EU begin with the assumption that their
members share common goals, the Organization for Security and
Cooperation in Europe, or OSCE, as it was renamed, presumes
that many of its participants disagree on how its standards are
to be implemented. The OSCE takes such disagreement as a given
and then works to find common ground.

Security in Europe today means solving conflicts, many of
them centuries old, before they escalate as Bosnia has. This
is why we have strengthened OSCE mechanisms, are making

38

vigorous use of its norms, ensuring full implementation of its
commitments, and increasing political and material support for
its conflict prevention activities. At the Budapest Summit a
comprehensive framework for the future of conventional arms
control was developed; uniform non-proliferation principles
were established among 52 nations; greater political and
material support was pledged for support for the High
Commissioner on National minorities, the preventive diplomacy
missions, and the Office for democratic institutions and human
rights; and Russia and the OSCE as a whole agreed to merge
negotiating efforts on the difficult issue of Nagorno-Karabakh
and provide peacekeepers there once a political agreement is
reached--all important steps on OSCE ' s path to becoming a more
meaningful organization with greater capabilities, operating
without regard to old Cold War dividing lines.

These decisions complement our efforts at NATO, and the
efforts of the European Union to pursue cooperative, integrated
security structures for Europe. But they do not make OSCE a
substitute for NATO or the EU. In no way can OSCE be made
"superior" to NATO. Because the functions, as well as the
structures of OSCE and NATO are entirely different, and shall
remain so, OSCE will not become the umbrella organization for
European security, nor will it oversee the work of the NATO
alliance. But we must develop new methods to identify and deal
with future potential Bosnia by addressing at an early stage
the causes of conflict. The OSCE must prove its worth in this
area, as the CSCE did in spreading democratic values and
legitimizing human rights. More must be done.

This brings us to another essential pillar of the new
security architecture: relations with Russia. If the West is to
create an enduring and stable security framework for Europe, it
must solve the most enduring strategic problem of Europe and
integrate the nations of the former Soviet Union, especially.
Russia, into a stable European security system.

The U.S. objective remains a healthy Russia — a democratic
Russia pursuing reform and respecting the rights of its
citizens, not fragmenting into ethnic conflict and civil war.
This is why the events in Chechnya are so disturbing. Chechnya
has become a serious setback for the cause of reform,
democratization, and the evolution of the Russian- Federation as
a stable, democratic, multiethnic state.

But as President Clinton stated in January, as Russia
undergoes a historic transformation, reacting reflexively to
each of the ups and downs that it is bound to experience,
perhaps for decades to come, would be a terrible mistake. If
the forces of reform are embattled, the United States must
reinforce, not retreat from, its support for them.

Enhancement of stability in central Europe is a mutual
interest of Russia and the United States. NATO, which poses no
threat to Russian security, seeks a direct and open
relationship with Russia that both recognizes Russia J s special
position and stature and reinforces the integrity of the other
newly independent states of the former Soviet Union.

It is in our interest for the NATO-Russia relationship to
develop in parallel with NATO expansion. But this relationship
can only deepen if Russia stays on the path of reform and
respects international norms.

39

NATO and Russia already have a solid relationship through
Russia's membership in the North Atlantic Cooperation Council
(NACC) and through active diplomatic contacts. The next step is
Russian acceptance of the documents which it has already
negotiated with the Alliance setting forth the terms of the
relationship both within and outside of PFP. This will include
cooperative efforts in areas where Russia can offer special
expertise or capabilities, including nuclear non-proliferation.

Informal discussions of the next steps in NATO-Russia
relations, while in a highly preliminary phase, continued in
January when Secretary Christopher met in Geneva with Russian
Foreign Minister Andrei Kozyrev.

Any such arrangements as part of a new security
architecture must also consider the special case of Ukraine.
Its geostrategic position makes its independence and integrity
a critical element of European security.

With your permission, Mr. Chairman, I would like to focus
more specifically on the ways we are matching our policy with
our resources to advance U.S. national interests.

SECURITY ASSISTANCE FOR CENTRAL EUROPE

The evolution of Europe's security architecture, guided in
large part by the U.S., will result in a fundamental
transformation and expansion of our bilateral and multilateral
security relations with the Central European states. Our FY
1996 security assistance reguests reflect the high priority we
attach to nurturing these relationships.

Our reguests are carefully designed to support our central
security policy goals in the region, including advancing PFP,
enhancing U.S. -Central European defense cooperation, promoting
regional stability, fostering regional cooperation, and
encouraging other states to play a greater role in
multinational peacekeeping activities.

In previous years, we have been able to devote only
limited security assistance resources to the region.
This year, we have increased resources in support of major
policy initiatives, including PFP, in conjunction- with
security assistance efforts in the region. All of the
democracies in Central Europe are eager to participate in
cooperative defense activities with us, but most lack the
wherewithal to do so.

We have designed a set of distinct, but
mutually-reinforcing security assistance reguests to advance
U.S. policy objectives in Europe. We believe our efforts are
consistent with the spirit of the NATO Participation Act of
1994 .

First, the Administration has included $60 million in
military assistance for Central European countries emd the New
Independent States under the Partnership for Peace program. In
addition, the Department of Defense budget request contains $40
million for Partnership for Peace activities more appropriately
conducted under DOD authorities. Collectively, this $100
million will meet the commitment made by the President last
summer in Warsaw to support the Partnership for Peace. These
funds will facilitate partner participation in PFP activities;
improve the compatibility and interoperability of these

40

countries' militaries with NATO forces; build bilateral ties
between U.S. and Central European militaries; provide us the
opportunity to influence the evolution of these defense
establishments; and finance a range of cooperative multilateral
security activities.

In addition, $25 million is proposed for Central European
defense infrastructure, peacekeeping, and related programs.
These funds will continue the process of equipping and training
the Baltic Peacekeeping Battalion, and will support the
reorientation of Central European militaries to defensive
postures, regional cooperation based on uniform standards of
equipment, and expanded military cooperation with the U.S. and
NATO.

Third, $25 million is requested for peacekeeping
operations in Central Europe--another way to integrate the
military forces of these nations into broader, cooperative
security arrangements.

Finally, the Administration has requested $7 million for
the International Military Education and Training (IMET)
program, which provides military educa 1 ion and training on a
grant basis to students from allied and friendly nations. IMET
is an extremely cost effective component of U.S. foreign
policy. It provides training in defense management concepts,
civil-military relations, human rights and military justice for
civilian and military defense officia-ls, members of national
parliaments charged with defense oversignt, and NGO personnel
from Central Europe. It provides U.S. access and influence in
a sector of society which often plays a critical role in the
transition to democracy.

POLITICAL AND ECONOMIC ASSISTANCE

Our efforts at building a viable security architecture for
Europe can only succeed if democracy and market economies take
root throughout Central Europe. Democratic reform in this
region is as important to U.S. interests now as when the SEED
Act was passed in 1989 The success of these democratic and
market reforms makes us all more secure; they are the best
answer to the aggressive nationalism and ethnic hatreds
uncorked by the end of the Cold War.

But the process of political and economic transformation
is jeopardized today by a host of challenges -- organized
crime, ethnic tensions, unemployment and other social
dislocations, the return of historic grievances, and the fire
that continues to rage in the Balkans.

Democratic institutions have been established, but they
remain fragile. Credible and transparent elections have been
held, but in some countries the governing coalitions are
unstable. Participatory structures for local government are
still rudimentary. There is an urgent need for social sector
restructuring throughout the region to solidify popular support
for continued reform and reduce heavy burdens on weak budgets.

In FY 1996, we are requesting $480 million through the
SEED program to maintain our assistance for democratic and
economic reform in Central Europe. These funds will promote
small business development to spur job creation. They will
restructure the financial sectors of the Central European
countries and they will establish lega], regulatory and

41

institutional frameworks conducive to private investment. In
addition, they will help build accountable, responsive public
administration at the central and local levels. They will- also
help combat organized crime. Finally, they will support social
sector reform in areas like health and housing.

BOSNIA AND CROATIA

The tragic war in Bosnia underscores the importance of
building an effective new architecture for conflict prevention
and resolution in Europe. Together with our partners in the
Contact Group, we are seeking a negotiated solution. The
Contact Group plan with its 51/49 territorial division must be
the basis for a settlement, and Bosnia's territorial integrity
and independence must be respected.

As you know, the parties entered into a ceasefire and a
cessation of hostilities last fall. But we are entering a very
precarious stage of this crisis. In the coming months, we face
a real risk of renewed and more destructive conflict not only
in Bosnia but in Croatia and perhaps elsewhere in the Balkans.

We have used every opportunity cU" inci this period to
intensify our diplomatic efforts to bring an end to the war.
At a meeting on February 14, the Contact Group discussed an
initiative, backed by Bosnian President Izetbegovic, to gain
President Milosevic's recognition of Bosnia and other former
Yugoslav republics, as well as his agreement to implement
tougher sanctions enforcement against the Bosnian Serbs.

Only a negotiated settlement has any chance of lasting.
This Administration is committed to pursuing that goal. What
we must not do is worsen the situation by unilaterally lifting
the arms embargo. We have always believed the embargo is
unfair and worked to end it multi laterally. But going it alone
would lead to the withdrawal of UNPROFOR and more violence.
Such a course would leave Sarajevo and the enclaves extremely
vulnerable to Serb offensives. It would effectively
Americanize the conflict, and lead others to abandon the
sanctions on Serbia. It would undermine the authority of all
UN Security Council resolutions, including those that impose
sanctions on Iraq and Libya.

Our efforts to end the bloodshed and promote a just and
durable peace are underpinned by our assistance efforts. The
United States has provided over $850 million in humanitarian
assistance since 1991 -- the most by any nation. We have
provided the largest quantity ^of food and have performed over
three-quarters of all airdrops.

Parallel to ongoing diplomatic efforts to secure a
peaceful solution to the conflict in Bosnia, we are working on
second track to provide practical and political support to the
fledgling Bosnia Federation. I would like to bring you up
to date on our latest actions aimed at nurturing the
Federation's development. —

You may recall that, as the result of our leadership, the
Federation was launched in March, 1994 when the Bosniac and
Croat communities within the Republic of Bosnia-Herzegovina
agreed to stop fighting each other and join in a federal
structure as a first step in recreating a peaceful,
multi-ethnic Bosnia-Herzegovina in which all persons,
regardless of ethnicity, may live in peace and security.

42

Over the past year, the ceasefire between the Bosniacs and
Croats has held. Nevertheless, significant bottlenecks have
impeded the full maturation of the Washington Accords which
launched the Federation. Consequently, last month in Munich
Defense Secretary Perry and I met with Bosnian Muslim and Croat
leaders which resulted in a Nine-Point Plan to support the
Federation.

Secretary Christopher has already taken action on one of
the key points by naming Roberts Owen, a highly respected
lawyer from Covington and Burling, as the international
arbitrator to render binding decisions on all matters referred
to him by either side. On March 7, we sent notification to the
Congress of our intent to provide $500,000 of SEED money to
fund Owen's important work. This is an effective and low-cost
way of working through some of the more contentious issues
facing the Federation; Bob Owen is the kind of experienced
lawyer who will gain the confidence of both sides.

Next week will mark the one-year anniversary of the
Washington Accords which brought the Bosnia Federation into
being. It is my pleasure to announce today that, consistent
with the Munich Plan and following mon 1 lis of consultations with
our friends and allies, the United Stales and the European
Union will co-host a meeting here in Washington on March 16 to
launch a small group of countries called "Friends of the
Federation." Top Federation leaders as well as President
Izetbegovic of the Republic of Bosnia-Herzegovina and President
Tudjman of the Republic of Croatia will attend.

The Friends of the Federation, which is an informal
grouping of donors who have committed substantial resources to
the Federation beyond humanitarian relief, will not be another
assistance grouping or bureaucratic entity. Rather, the
Friends will provide an informal consultative vehicle to
periodically focus on the Federation's development and
problems. Here in the U.S., we hope to garner additional
private sector support for the Federation as well.

Developments in Croatia have also required sustained
high-level attention. In fact, I returned yesterday from
meetings with President Tudjman and the Croatian leadership. I
would like to outline the situation briefly.

Croatia has experienced three years of stalemate since
early 1992, when UNPROFOR was established to help restore peace
and pave the way for talks between the Zagreb Government and
breakaway Serbs. As a result, President Tudjman decided in
January to end UNPROFOR ' s mission in Croatia, preparing a
possible military assault to re-take the 27 percent of Croatia
still in Serb hands, while at the same time pursuing economic
and political talks with the Serbs.

In response to these pressure tactics, however, the Serbs
became recalcitrant. President Milosevic in Belgrade rejected
proposals from the Contact Group and from Zagreb to *ecog"nize
Croatia. The Croatian Serb leadership in Knin suspended talks
with Zagreb on reopening transport routes and restoring utility
supplies. This gave Croatia even less reason to reconsider the
decision to expel the UN forces. The result has been an
escalating spiral of tension: both sides digging in--literally
and f iguratively--and likely to start fighting over the buffer
zone that the UN would have to vacate.

43

To break this dangerous spiral, I went to Zagreb with a
two-part message: we support the goal of Croatian
reintegration, but we think expelling the UN would unavoidably
re-start the war. I explored with President Tudjman
possibilities for maintaining an international presence in
Croatia that does not perpetuate an unjust status quo, but that
helps avoid hostilities. I was encouraged that he clearly
preferred to obtain a peaceful settlement if possible. He also
emphasized the importance of controlling Croatia's border, to
deter Serbian military equipment and personnel from coming into
Croatia out of Serbia and Bosnia.

The Croatian situation is a complicated problem and many
pitfalls lie ahead. Still, I have come back from my trip, and
subsequent consultations with our Contact Group partners,
relatively optimistic that a resolution to the current crisis
can be found. With delicate negotiations continuing at this
moment, all I can say now is that it should be possible to
reconfigure the UN presence in Croatia to satisfy the most
important legitimate concerns of the Croats and Serbs, while
keeping faith with the relevant UN Security Council resolutions.

SOUTHEAS TERN EUROPE

The southern Balkans and Aegean are becoming increasingly
important to Western and U.S. interests since the end of the
Cold War. Conflict or instability in these regions can impact
directly on the stability of central Europe, and tensions
between Greece and Turkey can weaken the ability of NATO to
provide a foundation for the expansion of European institutions.

Cyprus is key to any long term reduction in tensions between
these two NATO allies. For that reason, as well as our
long-standing humanitarian interest in the situation there, this
Administration has upgraded our efforts in support of a
resolution of the island's division. In January, President
Clinton appointed one of this nation's foremost attorneys,
Richard Beattie, as the first Presidential Emissary for Cyprus
since 1980. Mr. Beattie visited Cyprus and Greece last month,
and is in Turkey this week where he is meeting with the Turkish
leadership.

We believe the EU decision last Monday to begin Cyprus
accession talks after the 1996 EU Intergovernmental Conference
introduces a new incentive for both communities on the island to
work more effectively to resolve their differences.

In addition to these efforts to address the island's
division, we have been working actively to carry out Congress'
mandate to investigate missing persons on Cyprus. We have sent
advance personnel to meet with representatives of both
communities and to prepare the way for a full time team of
investigators that we expect to send later this spring.

Greece views the changed world situation as an opportunity
to play a leading regional role. We are cooperating- with Greece
to help it play this role, and to support economic and political
reform among its neighbors. Greece, as a member of NATO and the
EU, is ideally suited to accomplish this goal.

However, Greece's disputes with its neighbors have hindered
its ability to exert leadership in the Balkans. Concerns about
the treatment of the ethnic Greek population in Albania led to
tension between Athens and Tirana. This tension was aggravated

44

last summer by the attack on the Albanian border post at
Peshkepi and by the arrest and conviction of five members of the
Greek-Albanian community.

I am pleased to report that it appears relations between
Greece and Albania are improving, and both governments are
actively seeking to further normalize their bilateral
relationship. The Omonia defendants have been released from
detention. FM Papoulias will visit Albania this month. Greece
has invited Albania to participate in a Partnership for
Peace-type exercise this spring. The United States Government
will continue to play an active role in urging moderation and
promoting direct dialogue to resolve outstanding issues. We
will continue to urge the Albanian government to respect the
human rights of all its citizens.

Since February 1994, Greece has enforced an embargo against
FYROM. Greece claims that FYROM's use of the name "Macedonia",
the "Vergina Star" on its flag, and certain constitutional
provisions imply claims against Greece. This is a dangerous
situation. It risks further instability in the region and could
complicate our efforts to reach a resolution of the situation in
the rest of former Yugoslavia. The United States Government,
through Special Envoy Matthew Nimetz, has actively supported UN
efforts under Cyrus Vance to mediate a resolution to the
dispute. Mr. Vance has held a number of discussions' with the
parties over the last two years. We expect another round in the
near future-.

Tensions between Greece and Turkey reflect centuries of
distrust and hostility, and are particularly dangerous at this
time. We are working to improve the environment for reducing
tensions with our efforts on Cyprus, and most recently with our
support for the completion of the customs union between Turkey
and the EU. The lifting of the Greek veto and the consequent EU
agreement on March 6 to move forward on that customs union will
make a major contribution to stability in the region by
strengthening Turkey's ties to the west, promoting its economic
development, and improving the atmosphere for cooperation
between these two important NATO allies. We are seeking to
follow up on this development by encouraging other measures to
reduce the chances of confrontation and prevent differences
between these two countries from further complicating NATO
operations .

In Turkey, we seek the further development of a democratic,
secular state with a prosperous economy, a supportive approach
to Western interests, and high human rights standards. Turkey
is going through a difficult period in which its commitments to
ties" to the West and to Western principles are being
challenged. Our interests are considerable. Turkey stands at
the crossroads of almost every issue of importance to the U.S.
on the Eurasian continent — including NATO, the Balkans,
Cyprus, the Aegean, Iraq Sanctions, Middle East peace, Russian
relations in the Caucasus and Central Asia, and transit routes
for Caspian oil and gas. —

Our policy reflects the continuity of shared security
interests and intensive security cooperation. Assistance has
declined with the end of the Cold War, but Turkey is still an
important member of NATO, and we seek continued assistance to
support both U.S. and Turkish security interests in the region.
Turkey faces potentially serious security threats from Iran and
Iraq, natixins which continue to pose security problems for the

45

region. There can be no effective enforcement of UN sanctions
against Irag without active Turkish cooperation. Turkish
cooperation is also critical for Operation Provide Comfort,
which enforces Iragi compliance with UNSCR 688. Provide Comfort
deters Iragi repression and provides humanitarian assistance to
the people of northern Irag. It is a vital cornerstone of our
Irag policy.

We also have important economic interests in Turkey. A
stable, prosperous economy is necessary for a stable country,
and Turkey's economy is experiencing difficulties as the
government attempts to complete crucial economic reforms that
were begun in the 1980's. Ankara's scrupulous enforcement of
Iragi sanctions have made this process more difficult. ESF
supports efforts to stabilize the Turkish economy, which is also
in U.S. commercial interests. The Department of Commerce has
designated Turkey one of the world's ten "Big Emerging Markets,"
with enormous economic potential for U.S. trade and investment.
This Administration is committed to tapping this potential in
Turkey as elsewhere. Over 150 U.S. fiims with investments of $1
billion in Turkey share our determination and our optimism.

I want to make clear that the assistance we propose is a
good economic investment for U.S. taxpayers as well as serving
our strategic and political interests. Despite current
stresses, the fundamentals of the Turkish economy remain strong
and the prospects bright. Turkey has a young and well-educated
labor force, active markets, and has taken an important step
towards a new place inside the colossal European Union customs
zone as of this week.

Finally, I want to assure you that the Administration is
making a very serious effort to help Turkey improve its
performance in an area which is very important to all of us and
to Turkey: human rights. We are very concerned by the human
rights situation in Turkey. I urge reform every time I meet
with senior Turkish officials, and it was an important part of
my discussions when I visited Ankara last month. EU Allies also
stress the need for reform -- most recently this week in
announcing agreement to the EU-Turkey customs union. Turkish
officials well understand that they cannot have the full
partnership with the West they seek until they have
significantly improved their performance in this area.

IRELAND

Historically, strife in Northern Ireland has been tragic
evidence that central and southeastern Europe are not the only
parts of the region that suffer from legacies of violence and
hatred. The United States actively supports efforts by the
people of Northern Ireland, and the British and Irish
governments to find a peaceful settlement — and there are now
reasons for hope. We welcome the cease-fires now in effect, and
believe the process of disarmament should now begin. In
November the President laid out a number of initiatives to
enhance our support for the political and economic —
revitalization of Northern Ireland and the border counties of
Ireland, including a White House Conference on Trade and
Investment, and increasing the U.S. contribution to the
International Fund tor Ireland from $20 to $30 million over the
next two years.

We are well aware of your abiding interest in these matters,
Mr. Chairman, and would be pleased to appear before your

46

Committee at a future date to discuss them in fuller detail.

Taken together, the initiatives I have outlined underscore
our efforts to build a new European security framework -- to
expand democracy and prosperity, to integrate political,
economic and security institutions, and to build a unity that
has always eluded Europe, even with American involvement.

It will take some time before the forms and patterns of a
new era settle into place. In the meantime, we must expect
continuing change and upheaval in Europe--at times promising, at
times frightening. There are great problems. But there are
also great opportunities. To turn away from the challenges
would only mean paying a higher price later.

The United States will be an active participant in Europe
for a simple reason— our self-interest requires it. As we
proceed along this course, I look forward to close cooperation
with members of this committee and with Congress in general.

Thank you.

***************************

47

Question for the Record Submitted to Assistant Secretary Richard C.

Holbrooke

Question. I am interested in, perhaps a response in writing, as to what kind of
burdens Turkey is paying right now or bearing with respect to its role in Operation
Provide Comfort, and how the prospects look for our relationship there.

Answer. The GOT hosts Operation Provide Comfort, which enforces the "no-fly
zone" and supports humanitarian relief efforts in northern Iraq. This operation is
essential to the U.S. and Western initiative to contain Iraq.

We understand that many turks disapprove of Provide Comfort. They believe it
fosters the creation of a de facto Kurdish state on Turkey's border. Such a state
could threaten the integrity of Turkey by stimulating Kurdish nationalism among
Turkey's estimated 12 million Kurds, many of whom live in the Southeast.

The absence of governmental authority and the outbreak of fighting among Iraqi
Kurds has contributed to a situation in which the terrorist Kurdistan Workers'
Party (PKK) can and does operate against Turkey. Ankara has justified its incursion
into northern Iraq as necessary to remedy this situation.

Many Turks also maintain that Provide Comfort impedes the reestablishment of
normal relations with Iraq, formerly Turkey's second largest trading partner and a
key supplier of oil. The sanctions regime against Iraq is a major economic burden
to Turkey. GOT officials argue that the sanctions against Iraq have cost Turkey
some $18-$20 billion. Our own estimate is a considerably less, but still large: $5
billion. Turkish officials also point out that the Southeast has been the region most
heavily hit by sanctions, and that economic privation has promoted PKK recruit-
ment.

Operation Provide Comfort serves Turkey's interests by preventing the major in-
flux of mainly Kurdish refugees that could result from reestablishment of Saddam's
authority in the region. Turkey's Parliament has voted every 6 months to extend
the mandate for the Operation, although majorities have been shrinking and exten-
sive government lobbying has been increasingly necessary.

The GOT's support for Provide Comfort and the sanctions regime, despite the
heavy political and economic costs, indicates Turkey's steadfastness as an ally. The
USG has made a point of expressing our appreciation for the burden Turkey has
shouldered in maintaining the sanctions regime and hosting Provide Comfort. The
future of Provide Comfort, and the effectiveness of U.N. sanctions against Iraq, de-
pend heavily on the overall future of U.S.-Turkish relations.

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